Bitcoin, Ethereum, XRP, and Dogecoin all declined following a hotter-than-expected PCE inflation reading — the Federal Reserve's preferred inflation measure — which reportedly hit a 3-year high. The print reinforces the narrative that the Fed has little room to cut rates in the near term, removing a key tailwind that had been supporting risk assets including crypto.

Cryptocurrencies have traded with increasing sensitivity to macro data as institutional participation has grown — particularly BTC and ETH, which now track real-rate expectations more closely than in prior cycles. A sustained high-inflation environment that pushes rate-cut expectations further out into 2025 or beyond is a genuine headwind for assets that carry no yield and depend on liquidity and risk appetite.

The bull case for crypto here rests on the idea that the sell-off is a knee-jerk reaction to a single data point and that structural demand drivers — ETF inflows for BTC and ETH, the Bitcoin halving cycle — remain intact and can absorb macro noise. Bears would argue that at current valuations, speculative assets like DOGE and XRP are most exposed, and that if the 'higher for longer' rate narrative re-entrenches, the multiple compression could be significant.

Key things to watch: whether the PCE print triggers a meaningful repricing of Fed Funds futures (a sustained move pushing first-cut expectations past mid-2025 would be the more serious scenario), and whether spot Bitcoin ETF flows show outflows in the days following. A single inflation print rarely sets a trend, but it can accelerate one already in motion.