As markets braced for the release of the core PCE inflation report, cryptocurrency prices softened on Friday, reflecting investor caution ahead of this key economic indicator that could influence the Federal Reserve’s next moves on interest rates.

XRP, a payment-centric token, fell below its 200-day simple moving average (SMA) for the first time since early April, signaling increased selling pressure. The coin dropped under $2.20, losing 4.6% in the last 24 hours, according to TradingView data, as broader market weakness weighed on sentiment despite reports of rising corporate interest in XRP as a Treasury asset.

Bitcoin (BTC), the leading cryptocurrency by market value, also slipped, briefly dipping below the $105,000 mark during European trading hours. This extended its overnight losses, bringing the 24-hour decline to nearly 3%.

The downturn in BTC was exacerbated by a $358 million net withdrawal from 11 spot bitcoin ETFs on Thursday — marking the first outflow since mid-May and the largest single-day exit since early March, per SoSoValue. Concerns over a potential resurgence of trade tensions also contributed to the risk-off sentiment.

Other major tokens like Ethereum (ETH), Solana (SOL), and Dogecoin (DOGE) faced steeper losses, while smaller altcoins including Optimism (OP), Arbitrum (ARB), Bonk (BONK), and Pepe (PEPE) each dropped more than 10%, according to Coingecko.

Spotlight on Core PCE Inflation Data

The personal consumption expenditure (PCE) price index, which tracks consumer inflation, rose 0.15% in April. This brought the annual inflation rate down slightly to 2.2% from March’s 2.3%, based on forecasts compiled by FactSet.

The core PCE, which excludes food and energy prices and serves as the Federal Reserve’s preferred inflation benchmark, is expected to show a 0.12% monthly increase and a 2.5% rise year-over-year.

A continued cooling in inflation could bolster expectations for rate cuts by the Fed, potentially providing a tailwind for bitcoin and other cryptocurrencies.

Valentin Fournier, Lead Research Analyst at BRN, commented, “Markets are focused on today’s Core PCE data release, which could reignite optimism if inflation trends downward further.”