This Week in Crypto News (September 1st until September 7th): PCE Data Sparks Volatility, Fed Rate Cut Hopes Rise

Bitcoin slumps to 7-week low while investors weigh U.S. inflation data and Fed policy outlook.

U.S. PCE Inflation Report Rattles Risk Assets

Last Friday’s Personal Consumption Expenditures (PCE) inflation report came in line with forecasts, showing core PCE up 0.3% month-over-month and 2.9% year-over-year. While not a surprise, it was the highest reading in five months, fueling debate on how the Federal Reserve will act in September.

• Market reaction: Traders now see an 87% chance of a 25 bps rate cut later this month.

• Crypto’s response: Bitcoin fell sharply, hitting around $108,100, its lowest level in nearly two months. Over $170 billion in crypto market cap was erased in 24 hours as leveraged longs were liquidated.

This underscores how sensitive crypto remains to U.S. macroeconomic signals and Fed policy shifts.

ETF Flows Show Investor Caution

The PCE report also spilled into crypto investment vehicles:

• Bitcoin ETFs recorded $127M in outflows, while Ethereum spot ETFs lost $165M—breaking ETH’s previous inflow streak.

• The outflows highlight how institutional players are pulling back in the face of short-term uncertainty.

For individual buyers, these flows often act as a sentiment signal, reflecting how professional investors are positioning.

Whales, Leverage, and Liquidations Accelerate Downturn

Beyond macro data, whale activity amplified the move:

• Spoof orders and large spot sales helped drag Bitcoin below $109.5K.

• Leverage in the system cracked, with $350M liquidated in 24 hours, hitting retail traders hardest.

For buyers considering entry points, this volatility shows the importance of managing risk and avoiding over-leveraged positions.

Broader Macro Outlook: Fed Cut Still in Play

Despite last week’s turbulence, the bigger picture may favor crypto:

• A September Fed rate cut is still widely expected, with softer labor data supporting the case.

• Lower rates typically boost risk assets like Bitcoin and Ethereum, as investors search for yield outside of bonds and cash.

Stocks ended August mixed, but the “Goldilocks” scenario—cooling growth without runaway inflation—remains on the table.

What It Means for Crypto Investors

• Short term: Expect more volatility as whales and ETF flows drive sharp moves.

• Medium term: A Fed rate cut could trigger a crypto rebound, lifting Bitcoin, Ethereum, and major altcoins, similar to what happened with Solana last week.

• For individuals: Dollar-cost averaging (DCA) and avoiding leverage may be safer strategies until the Fed meeting later this month.

Bottom Line

The PCE inflation report shook crypto markets, sending Bitcoin to fresh lows and sparking heavy ETF outflows. But with a Fed rate cut still likely in September, the stage may be set for a rebound in digital assets once the dust settles. For now, buyers and long-term holders should expect turbulence before clarity.

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