As a seasoned crypto investor with a knack for deciphering market trends and a keen eye for economic indicators, I find myself increasingly optimistic about the future of my digital assets portfolio. The recent dip in US PCE inflation to 2.2% is a welcome sign for me, as it signals potential further interest rate cuts by the Federal Reserve – a move that historically has boosted Bitcoin prices.
The U.S. Bureau of Economic Analysis announced on Friday that the rate at which goods and services are consumed by households in the United States, known as the Personal Consumption Expenditure (PCE) price index, has slowed down to approximately 2.2%. Meanwhile, financial experts like Matrixport and QCP Capital predict an impressive Bitcoin price surge in the last quarter of this year.
US PCE Inflation Falls to 2.2%
Today, September 27th, the U.S. Bureau of Economic Analysis disclosed the August data for the Federal Reserve’s preferred inflation indicator, the US PCE. In contrast to forecasts predicting a 2.3%, the annual PCE rate was slightly lower at 2.2%. This represents a decrease from last month’s rate of 2.5%. Moreover, the monthly inflation rate saw an increase of only 0.1%, as compared to the previous month’s rise of 0.2%.
The annual core US PCE inflation jumps to 2.7%, in line with market expectations, rising from 2.6% in the earlier month. The monthly core PCE comes in at 0.1%, falling from 0.2% last month.
This month, the Federal Reserve lowered interest rates by 0.5%, leading to a surge in momentum for Bitcoin prices and the wider cryptocurrency market. Given that Q4 has traditionally been a positive period for the crypto market, experts predict further rate cuts by the Fed this year and increased inflow into spot Bitcoin ETFs could propel Bitcoin’s price up to $100K.
The CME FedWatch tool indicates a rise in the likelihood of a 0.5 percentage point interest rate hike, now standing at approximately 54%, following the recent release of inflation figures, adding to the optimism prevailing in financial markets.
The U.S. dollar index (DXY) exhibits volatility following a steady trend around 100.5 on Friday. Additionally, the yield on the 10-year U.S. Treasury bond experiences a minor decrease to 3.77%, having risen for the previous fortnight. It’s worth noting that the value of Bitcoin tends to fluctuate inversely with both the DXY and the Treasury yield.
Bitcoin Price Set to Rally in Q4
Matrixport, known for its accurate Bitcoin price predictions during last year’s rally and subsequent sell-off following the approval of spot Bitcoin ETFs, has unveiled its projections for Q4. The respected crypto research firm anticipates yet another historically bullish quarter for the Bitcoin market, signaling an end to a six-month period of relative stability or consolidation.
Over the last ten years, Bitcoin has typically increased by around 40% from October to March. Matrixport analysts anticipate that this historical trend could recur in the upcoming months, potentially leading to another significant rise in Bitcoin’s value.
The surge in Bitcoin can be attributed to several factors such as the Federal Reserve lowering interest rates, economic stimuli from China, increased Bitcoin holdings by MicroStrategy, and an increase in investments in spot Bitcoin ETFs. Moreover, the recent US Personal Consumption Expenditures (PCE) inflation data provides additional support for Bitcoin’s continued rally.
As an analyst, I’m observing a strengthening macroeconomic landscape that seems favorable for risk assets. Notably, Bitcoin (BTC) has surpassed its previous descending trendline and converted the $65,000 resistance level into support. This bullish momentum extends to Bitcoin and Ethereum options markets, indicating a potential push towards $70,000.
Bitcoin’s price surged over 3%, reaching a current value of approximately $65,830. Earlier today, it had dropped to $63,756 and peaked at $65,986. Moreover, the trading volume experienced a substantial boost by around 56% within the last 24 hours, suggesting a significant rise in trader engagement.
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2024-09-27 16:00