Bitcoin’s price showed a modest recovery despite recent U.S. Personal Consumption Expenditure (PCE) data indicating that inflation remained above the Federal Reserve’s target range of 2%.
Investors awaited this data following better-than-expected U.S. GDP results for the first quarter. The PCE and Core PCE inflation figures are crucial indicators of current inflation levels and play a significant role in the Federal Reserve’s decisions regarding interest rates.
U.S. PCE Inflation Holds Steady Amidst Economic Data Review
Recent data from the Commerce Department reveals that U.S. Personal Consumption Expenditure (PCE) inflation increased by 0.3% in April, aligning with market forecasts. March also saw a similar 0.3% uptick. Year-over-year, PCE inflation rose by 2.7%, meeting expectations set by Wall Street analysts.
Similarly, Core PCE inflation, which excludes volatile food and energy prices, grew by 0.2% in the last month, following a 0.3% increase in March. Annually, Core PCE inflation surged by 2.8%, mirroring the previous month’s rise.
Despite a slight cooldown in Core PCE inflation, the overall inflation rate remains elevated, tempering investor confidence. The persistent inflation above the Federal Reserve’s target range of 2% has contributed to cautious market sentiment.
Investors are now keenly awaiting clarity on potential Federal Reserve actions regarding interest rates, given concerns that higher rates could further dampen market risk appetite.
Bitcoin Price Reacts Modestly to Inflation Data
Despite the latest inflation figures, Bitcoin experienced a slight recovery. Following the release of the Personal Consumption Expenditures (PCE) inflation data, Bitcoin’s price increased by 0.95% to reach $68,773.23. However, trading volume remained subdued at $27 billion over the past 24 hours.
In contrast, the U.S. 10-year Bond Yield decreased by 0.73% to 4.515%, while the U.S. Dollar Index Futures dropped 0.27% to $104.380. The PCE data release has heightened concerns about a potentially dovish stance from the U.S. Federal Reserve.
According to the CME FedWatch Tool, there is a 99% probability that the Federal Reserve will maintain its current policy rates at the upcoming June meeting.
Daniel Yan, co-founder of Matrixport, emphasized the significance of the April PCE data in a recent social media post. He suggested that a 0.2% month-on-month increase in both Core PCE and PCE would be bullish for the market, whereas a 0.3% increase would be bearish. A mixed scenario, with one measure at 0.2% and the other at 0.3%, would indicate a neutral outlook.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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