Breaking: PCE Inflation Increases to 2.8% in September, Bitcoin Surpasses 90,000
This report on the September PCE Inflation gave the markets predictably. In light of this report, many are expecting a 25 basis point rate cut at next week’s FOMC meeting. As the inflation data were released, the crypto markets were immediately activated with Bitcoin ascending back to $90,000, which is a critical psychological price level, having previously suffered a dip earlier in the day.
The BEA has released new measurements indicating inflation in the PCE premium index is 2.8% YoY as of September, which is on the mark for the predictions set forth by economists. In September, the PCE was also on target, coming in at 0.3% MoM. Although many are noting a cooling in inflation, this report indicates that the Inflation PCE was at its highest rate October 2023.
The Core PCE Inflation numbers came in below expectations of 2.9% and 2.8%, and are likely a slight improvement from August’s numbers of 2.9%. Core PCE Inflation is 2.8% and was expected to be 0.2% overall. They expect growth at moderation through octobers figures.
The federal reserve cares about long term inflation indicators. Core and headline PCE better than expected and give the federal reserve’s financial liquidity for the 3rd time for the year to be justified. We expect the 0.25% cut to be implemented.
Heading into the PCE report, bitcoin prices were dropping and went below 90k, dropping from a high of 93k. After the report on PCE inflation was released, bitcoin prices quickly rebounded to prices of 91k. Expecting monetary easing in the near term is the likely justification for increases. The PCE inflation report helped push the flagship cryptocurrency to 94k earlier this week.
According to market analysts and CoinGape, should the Fed announce its third rate cut of the year next week, Bitcoin could realistically target $100,000. Historically, Bitcoin has had strong runs before rate cuts and even recorded new all-time highs (ATHs) this year after the September and October cuts.
With inflation continuing to stabilize and policies becoming even more lenient, the traditional and even crypto markets are preparing for a potential swing and, more importantly, another Bitcoin breakout.
Conclusion
The PCE inflation numbers released this week showed inflation numbers in line with market expectations, strengthening market conviction in another 25 bps rate cut this September. With inflation showing no alarming surprises, and inflation still elevated, the Federal Reserve now has greater leeway to ease off the brakes for the third time.
Bitcoin’s quick bounce back to and above $90,000 after the release indicates how bullish the crypto markets are in anticipation of the rate cut. Increasingly confident of a dovish Fed, many Bitcoin bulls are dreaming of the 100k mark. The upcoming week’s FOMC decision, in particular, will be critical for what will ultimately be the next major crypto market rally.
