Breaking: Bitcoin Nears $85K As US PCE Inflation Cools To 3.3%

Bitcoin is now nearing $85,000 after receiving new hints from the latest US inflation report on the Federal Reserve’s next rate cut. The data came as traders persisted in watching for inflation, consumer spending data and prospects for monetary policy.

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Bitcoin Nears $85,000 Level As US PCE Inflation Cools

At press time, Bitcoin rose 0.5% to $84,813.74, approaching the $85,000 level on Wednesday, September 30. The move comes as a continuation of the recovery that started from the times of BTC’s descent to around $76,000 in mid-September.

The chart displays Bitcoin price action around September 19, which appears to be when it broke above the $80,000 threshold. The rally took off around September 21 when BTC rallied above $86,000. The BTC price then entered a consolidation period.

From September 23, the price of BTC rose and fell within a $83,000 to $85,000 range.The price of BTC has been stable, trading between $83,000 and $85,000 since September 23. The price rallied again on September 30 and is now back near the upper end of the range.

Driving the Bitcoin rally, the U.S. PCE report for August revealed a further slowdown in monthly inflation. The headline PCE price index increased 0.3% from July. Excluding food and energy, the index for core PCE increased 0.2%.

The market had expected headline PCE growth of 3.7% and core PCE growth of 3.3% for the year. The official BEA release, however, has annual headline PCE at 3.4% and core PCE at 3.0%.

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Strong Spending Complicates Fed Rate Outlook

The report revealed that demand by American consumers remained solid as well. The price indexes for personal consumption expenditures rose 0.9% in August, with the indexes for real personal consumption expenditures rising 0.6%.

Personal income increased 0.2%. Disposable personal income increased 0.3%. Despite the easing of inflation pressures, the figures indicate that households remained spending.

That makes for a mixed picture for the Fed rate decision. A less tight policy stance would be warranted with lower monthly core inflation. But inflation is still above the central bank’s 2% target, although it is less than that rate annually.

That uncertainty is reflected in CME FedWatch data as displayed in the chart above. The markets assumed a 52.9% chance that the rates will stay unchanged at 3.75%-4.00% at the October 28 FOMC meeting. Meanwhile, a 47.1% probability was assigned toward a 25 bps hike to the 4.00%-4.25% range.

Traders have been adjusting their rate expectations after Bitcoin moved closer to $85,000.