U.S. PCE Data Released: How Did Bitcoin (BTC) and the Dollar React?

Bitcoin (BTC) surged past $65,000 following the Federal Reserve’s 50 basis point interest rate cut last week. As October, historically a bullish month for Bitcoin, begins, analysts expect further gains for the leading cryptocurrency. Today, the U.S. Personal Consumption Expenditures (PCE) data, a key inflation indicator closely watched by the Fed when making interest rate decisions, was released. Here are the key figures for August:

August PCE Data Highlights:

• Core PCE Price Index (YoY): Released at 2.7% (expected: 2.7%, previous: 2.6%)
• Core PCE Price Index (MoM): Released at 0.1% (expected: 0.2%, previous: 0.2%)
• PCE Price Index (YoY): Released at 2.2% (expected: 2.3%, previous: 2.5%)
• PCE Price Index (MoM): Released at 0.1% (expected: 0.2%, previous: 0.2%)

Initial Reactions of Bitcoin (BTC) and the Dollar (DXY)

Both Bitcoin and the U.S. dollar saw immediate reactions to the release of the PCE data. While the inflation figures came in largely as expected, Bitcoin’s recent bullish momentum was further fueled, as the market expects continued Fed easing. Meanwhile, the dollar index (DXY) saw a slight pullback.

Rate Cut Expectations Remain High

With the Fed’s first rate cut already implemented, all eyes are on the next meeting in November. According to CME’s FedWatch, the likelihood of a 25 basis point rate cut stands at 51.2%, while a 50 basis point cut is priced at 48.8%. Analysts predict that the Fed may implement one or two more rate cuts before the end of 2024.

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