Predictions Revealed for U.S. PCE Inflation: How Will Bitcoin Be Affected?

• Cryptocurrency traders are closely watching the Personal Consumption Expenditures (PCE) inflation data for further clues after Bitcoin (BTC) surpassed $63,900.
• According to consensus, the Annual PCE inflation is expected to further decrease from last month’s 2.6% to 2.4%, with a monthly rate increase of 0.3%.
• The U.S. Dollar Index (DXY) is hovering around 103.8 on Thursday after experiencing high volatility in previous sessions.

Critical Personal Consumption Expenditures data in the U.S. is being released today; how will the data impact Bitcoin prices in the U.S.?

Critical Data in the U.S. Revealed Today

Cryptocurrency traders are closely watching the Personal Consumption Expenditures (PCE) inflation data for further clues after Bitcoin (BTC) surpassed $63,900. The U.S. Bureau of Economic Analysis will release the PCE, which is the inflation measure preferred by the U.S. Federal Reserve (Fed). The data holds critical importance following the unexpectedly hot Consumer Price Index (CPI), which led to the removal of interest rate cuts from the table by the Fed. Personal income, personal spending, and initial jobless claims will also be announced today.

Wall Street giants such as JPMorgan, Bank of America, UBS, Morgan Stanley, Citigroup, Deutsche Bank, Nomura, RBC, Barclays, Goldman Sachs, TD Securities, and Wells Fargo are divided on PCE after the CPI fears, but most expect inflation to decline further.

According to consensus, the Annual PCE inflation is expected to further decrease from last month’s 2.6% to 2.4%, with a monthly rate increase of 0.3%. Additionally, the Core PCE, preferred by the Fed to measure inflation, is expected to increase by 0.4% monthly and decrease to 2.8% annually from last month’s 2.9%.

While Wall Street forecasts largely align with market consensus, Fed Chair Jerome Powell expecting three interest rate cuts in 2024 and cautious statements from Fed officials after CPI indicate that expected rate cuts may likely begin in September. The market currently assigns a 65% probability to Fed interest rate cuts in June, with March and May off the table. Additionally, CME FedWatch indicates a 51% probability of a 25 basis points interest rate cut in June.

The U.S. Dollar Index (DXY) is hovering around 103.8 on Thursday after experiencing high volatility in previous sessions. A stronger-than-expected PCE could further reduce bets on interest rate cuts in the first half, potentially boosting the dollar and affecting Bitcoin prices. Additionally, U.S. 10-Year Treasury yields (US10Y) are rising ahead of crucial PCE data, currently showing a 0.014% increase at 4.29%, according to CNBC. Bitcoin prices tend to move inversely to U.S. Treasury yields.

Will Bitcoin Price Encounter Resistance Against PCE Announcement?

Popular analyst Michael van de Poppe suggests taking long positions between $46,000 and $53,000 in case of a correction. Matrixport highlights the potential for a 15% market correction after Bitcoin’s recent surge above $60,000, but with no significant resistance before the $68,700 all-time high.

Spot Bitcoin ETF and FOMO are driving a rally, with Bitcoin ETFs recording the largest influx of $673 million on Wednesday. The BTC price surpassed $63,000, only 9% away from $68,700. The 24-hour low and high are $57,093 and $63,913, respectively. Additionally, trading volume increased by 150% in the last 24 hours, indicating growing interest among traders.

Futures and options open positions (OI) have reached record levels, with total option OI exceeding $33.79 billion, according to Coinglass data. Despite sky-high financing rates, FOMO is pushing Bitcoin prices, aligning with the predictions of many experts forecasting $100,000.