- Crypto markets await tonight’s US PCE inflation data, key for Fed rate cut decisions.
- Economists expect a soft PCE print, potentially boosting Bitcoin and other risk assets.
- A high PCE reading (0.3%+ monthly core) could trigger crypto price drops and volatility.
The U.S. Bureau of Economic Analysis is scheduled to release its key inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, tonight, putting the crypto market on watch for potential turbulence, which is a critical indicator for the Federal Reserve.
With Bitcoin hovering around $106,000 and altcoins in a state of flux, traders are eyeing the PCE data for cues that could tip the scales toward long-awaited interest rate cuts.
What Economists Are Expecting from Core PCE
Economists expect the core PCE to rise just 0.1% in April, a soft print that would extend a three-month cooling streak in inflation. On a yearly basis, the headline PCE is projected to drop to 2.2%, its lowest in seven months, while the core reading is forecast to ease to 2.5%, the softest since March 2021.
If confirmed, this could reinforce the narrative that the Fed’s tightening cycle is finally having its intended effect.
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It is important to note that Fed Funds futures suggest the first rate cut won’t come until September at the earliest, and even then, the odds remain murky. Current pricing implies only 40 basis points in rate reductions through the end of 2025, one of the most conservative paths projected in recent months.
Why Tonight’s PCE Data Is a Big Deal for Crypto
For crypto markets, tonight’s data could prove pivotal. A weaker-than-expected PCE print (0% or lower) would likely weigh on the US dollar and boost risk assets like Bitcoin and Ethereum, potentially triggering a breakout in a market already leaning bullish due to increasing institutional demand.
The Coinbase Premium Index, which has remained positive for 20 straight days, suggests that US-based investors are already buying the dip, anticipating macro tailwinds.
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Conversely, a hot print, particularly anything at or above 0.3% on the monthly core PCE, could dash hopes for near-term easing, strengthening the dollar and dragging down crypto prices. In that case, digital assets would likely face another bout of volatility as traders recalibrate rate cut bets and prepare for a longer stretch of high borrowing costs.
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