Fed's Preferred Inflation Gauge PCE Cools To 2.6%, Bitcoin & Altcoins To Rally?

Highlights

The US headline PCE inflation rate slowed to 2.6% from 2.7%.
The annual core PCE inflation also dropped as expected to 2.6% from 2.8%
Bitcoin and altcoins survive major selloff.

Traders bracing for PCE inflation data triggered positive sentiment in the crypto market as inflation cools in the US. The U.S. Bureau of Economic Analysis reported headline PCE inflation rate slowed to 2.6% from 2.7%, which came in line with market estimates. The annual core PCE inflation also dropped as expected to 2.6% from 2.8%. The monthly PCE and core PCE data also showed cooling inflation.

The CME FedWatch Tool now indicates the probability of a 25 bps rate cut in September. The Fed official Mary Daly said the cooling PCE inflation is good news the preferred inflation gauge shows prices rose at the slowest pace since March 2021 but the Fed is not done yet, giving a hawkish remark.

Wall Street giants such as JPMorgan, Goldman Sachs, and Morgan Stanley anticipate inflation to cool, with the Fed rate cut starting in September. S&P 500, Nasdaq 100, and Dow Jones Industrial Average stock market futures as traders found cues on potential rate cuts this year.

Also Read: Kraken Co-Founder Donates $1M In ETH To Donald Trump

Bitcoin, Crypto Market to Recover From Weakness?

Bitcoin and altcoins such as Ethereum, Solana, XRP, and others saw selloff as a result of options expiry. Traders likely digested PCE inflation data and presidential debate between Donald Trump and Joe Biden.

Rekt Capital revealed that Bitcoin Daily Closed was below the Bull Flag top so it is likely to witness additional consolidation inside the pattern. However, BTC price is “only one Daily Close above the Bull Flag top away from a breakout.”

Popular analyst Michael van de Poppe expects Bitcoin to continue consolidating in the next few days. He believes altcoins will have a higher return than Bitcoin, but didn’t hint at any signs of early altcoin season. BTC price has survived the massive selloff amid a number of positive developments.

However, Bitcoin options data indicate a transition toward recovery amid a rising call open interests, as per Deribit. Despite the large market fluctuations, the IV of Bitcoin has not witnessed a significant increase. The IV of BTC for each major term is below 50%. CoinGlass data also indicate a total increase in options open interest.

Meanwhile, the US dollar index (DXY) is dropping from 106.12 ahead PCE, with the current reading at 105.85. The US 10-year Treasury yield dropped to 4.263% after the PCE inflation slows.

BTC price pares earlier gains and now trading sideways, with the price currently trading at 61,372. The 24-hour low and high are $60,561 and $62,292, respectively. Furthermore, the trading volume has increased by 1% in the last 24 hours.

Also Read: Bitcoin Price To $65k Or $55k After US PCE Data? IMF Asks Fed To Delay Rate Cuts

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Varinder Singh

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