Stagflation Fears Trigger Bitcoin Drop Below $65K as Fed Signals Prolonged Hawkishness

Bitcoin Plunges Below $65K Amid Stagflation Fears

Bitcoin has slipped below $65,000 following a surge in stagflation concerns triggered by weak U.S. PMI data, marking a dramatic reversal from yesterday's bullish momentum that had Bitcoin targeting $68,000. The decline coincides with Federal Reserve official Musalem stating inflation remains too high, supporting further rate hikes and intensifying pressure on risk assets.

Stagflation Warning and Fed Hawkishness Drive Market Shift

The U.S. PMI data signaled a potential stagflation scenario (stagnant growth with high inflation), directly contradicting yesterday's bullish narrative. This comes as Musalem warned against relying on productivity to lower inflation, suggesting prolonged high rates. Consequently, Bitcoin's price has dropped below $65K—contrasting sharply with the $67K support level targeted two days ago and the $75K breakout anticipation.

Nasdaq Declines as AI Anxiety Compounds Crypto Pressure

Global equities have shown mixed signals, with Nasdaq futures declining due to investor anxiety over AI stocks' high valuations and uncertain revenue potential. The Nasdaq futures slip on AI anxiety, reflecting broader market concerns about AI development pace and monetization. This has compounded pressure on Bitcoin, which now holds above $64,500 as short liquidations decline—a stability marker contrasting with the recent drop.

What to Watch Next

• Upcoming U.S. jobs data to assess labor market strength and Fed policy trajectory
• Further Fed commentary on inflation persistence, especially Musalem's hawkish stance
• AI sector performance to gauge Nasdaq recovery and potential crypto rebound

Sources

• Bitcoin price falls below $65K amid stagflation warning
• Fed's Musalem backs rate hikes, inflation too high
• Nasdaq futures slip on AI anxiety

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