Fed’s Favorite Inflation Gauge, PCE, Cools to 2.6%, Bitcoin, Altcoins Rebound?

Traders bracing for PCE inflation data have sparked positive sentiment in the cryptocurrency market as inflation cools in the United States. The US Bureau of Economic Analysis reported the headline PCE inflation the rate slowed to 2.6% from 2.7%, in line with market estimates. Annual core PCE inflation also fell as expected to 2.6% from 2.8%. Monthly PCE and core PCE data also showed a cooling of inflation.

THE CME FedWatch Tool now indicates the likelihood of a 25 basis point rate cut in September. Fed official Mary Daly said the cooling of PCE inflation is good news

The preferred inflation gauge shows prices rising at the slowest pace since March 2021, but the Fed isn’t done yet and has issued a hawkish statement.

Wall Street giants like JPMorgan, Goldman Sachs and Morgan Stanley they expect inflation to cool, with the Fed cutting rates starting in September. S&P 500, Nasdaq 100 and Dow Jones Industrial Average stock market futures, as traders found insights into potential rate cuts this year.

Read also: Kraken co-founder donates $1 million in ETH to Donald Trump

Will Bitcoin and the Cryptocurrency Market Recover from Weakness?

Bitcoin and altcoins like Ethereum, SolanaXRP and others saw a sell-off following options expiration. Traders likely digested PCE inflation data and the presidential debate Donald Trump and Joe Biden.

Rekt Capital revealed that Bitcoin Daily Closed was below the Bull Flag high, so we are likely to see further consolidation within the pattern. However, BTC price is “just one daily close above the upper edge of the bullish flag away from a breakout.”

Prominent analyst Michael van de Poppe predicts that Bitcoin will continue to consolidate in the coming days. He believes that altcoins will outperform Bitcoin, but has not hinted at any signs of an early altcoin season. BTC price has survived the massive sell-off amid a series of positive developments.

However, Bitcoin Options data indicates a transition to recovery amid rising open interest in calls, as per Deribit. Despite large market fluctuations, Bitcoin’s IV has not seen a significant increase. BTC’s IV for each major term is below 50%. CoinGlass data also indicates a total increase in options open interest.

Meanwhile, the US dollar index (DXY) is falling from 106.12 ahead of the PCE, with the current reading at 105.85. The US 10-Year Treasury Yield fell to 4.263% after PCE inflation slowed.

BTC price breaks even on previous gains and is now moving sideways, with the price currently trading at 61,372. The 24-hour low and high are $60,561 and $62,292 respectively. Additionally, trading volume has increased by 1% over the past 24 hours.

Read also: Bitcoin Price at $65,000 or $55,000 After US PCE Data? IMF asks Fed to delay rate cuts

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