Cryptocurrency markets faced renewed pressure early this week as profit-taking intensified ahead of a crucial inflation report due Friday. Notably, Dogecoin (DOGE) and XRP led the pullback, declining sharply as traders reassess risk amid macroeconomic uncertainty.
Eyes on Core PCE – A Crucial Inflation Gauge
All attention is now on this Friday’s Core Personal Consumption Expenditures (Core PCE) data — a key measure of underlying inflation used by the Federal Reserve. The Core PCE index, which excludes volatile food and energy prices, is expected to offer critical clues about the Fed’s next interest rate policy move.
“Traders see these macroeconomic events as a welcome stability boost,” said Jeffrey Ding, Chief Analyst at HashKey Group, in a message to CoinDesk. He noted that the crypto market’s resilience has been bolstered by optimism following former President Trump’s decision to delay EU tariffs, originally scheduled for this week.
Market Sentiment Mixed After Tariff Delay
Markets calmed modestly on Monday after Trump postponed new European Union tariffs to July 9 following a “constructive call” with EU Commission President Ursula von der Leyen. However, Singapore-based QCP Capital warned that such policy shocks remain a risk to market stability.
Bitcoin Volatility Narrows Ahead of Fed Data
The Bitcoin (BTC) July-to-June implied volatility spread — a measure of expected price swings between the two months — has compressed from over 2 vols to below 1. This indicates that traders are bracing for potential volatility tied to the upcoming inflation release.
“In a world of erratic policymaking, crypto increasingly looks like the grown-up at the table,” QCP Capital wrote in a market note, emphasizing the sector’s relative resilience compared to traditional markets.
Institutional Inflows Hold Steady Amid Uncertainty
Despite the broader risk-off tone, spot Bitcoin ETFs continue to see steady inflows. BlackRock’s IBIT has recorded 30 consecutive days of net inflows, underlining strong institutional interest even as traditional tech ETFs like TQQQ experience outflows.
Conclusion
While Dogecoin and XRP struggle, Bitcoin’s stability and institutional confidence offer a silver lining. Still, with the Core PCE print looming, traders remain cautious. A hotter-than-expected number could shake up markets once again, keeping crypto volatility firmly in play.