Bitcoin pulled back from recent three-month highs on Wednesday as investors turned cautious ahead of key U.S. inflation figures that could influence expectations for the Federal Reserve’s interest-rate path.
Markets were also bracing for Nvidia’s closely watched quarterly results. The AI chipmaker’s earnings are expected to provide fresh direction for risk appetite and the broader artificial intelligence trade in the weeks ahead.
Bitcoin declined 0.17 percent to $78,399 by 12:13 GMT, after breaking above the $80,000 mark earlier this week.
U.S.-Iran optimism limits Bitcoin’s losses
Optimism surrounding the U.S.-Iran war helped limit Bitcoin’s losses after Russian media reported that the two sides had reached a ceasefire agreement that could be announced in the coming days.
Oil prices fell following the report, while positive comments from Pakistan and the resumption of Iran-Oman talks over the Strait of Hormuz further supported risk sentiment.
Bitcoin’s recent rally has been driven largely by the so-called “debasement trade,” as investors bet that measures by the U.S. Treasury to ease a surge in bond yields could put pressure on the dollar. This has encouraged flows into alternative and riskier assets, including Bitcoin, other cryptocurrencies and gold.
Read: Bitcoin jumps 4.23 percent above $80,000 as weaker dollar, ETF inflows fuel crypto rally
Investors await key U.S. inflation data
Markets now await the PCE price index data due later Wednesday, with the report set to provide a key test for investor sentiment. The index is the Federal Reserve’s preferred inflation gauge and could influence expectations for interest-rate moves this year. Core PCE inflation is expected to remain above the Fed’s 2 percent annual target.
A hotter-than-expected inflation reading could undermine the debasement trade, as persistent price pressures would increase the likelihood of higher interest rates. That would support the dollar while reducing the appeal of alternative assets such as Bitcoin and gold.
Broader cryptocurrency markets also moved lower alongside Bitcoin after posting strong gains in recent sessions.
Ether, the world’s second-largest cryptocurrency, fell 0.59 percent to $2,459.74, while XRP dropped 4.27 percent to $1.4123.
Solana declined 1.92 percent to $96.765, Cardano slid 3.9 percent, while BNB gained 0.56 percent, bucking the broader market trend.
Among memecoins, Dogecoin fell 4.31 percent, while $TRUMP dropped 4.84 percent.
