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- BTC briefly surged above $110K after July PCE data release.
- July PCE shows steady 2.6% YoY inflation, supporting a favorable macro outlook.
- Traders price in a high chance of a September Fed rate cut.
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Bitcoin (BTC) experienced a short-lived surge following the release of July’s Personal Consumption Expenditures (PCE) inflation data, which came in line with market expectations. The Bureau of Economic Analysis reported a year-over-year (YoY) increase of 2.6%, signaling steady inflation and briefly boosting BTC prices above $110,000. However, the flagship cryptocurrency has since retraced to intraday lows near $109,000, reflecting ongoing market volatility.
July PCE Inflation Steady, Core Data Supports Market Optimism
The July PCE data revealed a 2.6% YoY rise and a 0.2% month-on-month (MoM) increase, matching analysts’ forecasts and slightly lower than June’s 0.3% MoM reading. Core PCE, which excludes volatile food and energy prices, rose 0.3% MoM and 2.9% YoY, confirming that inflation remains under control.
This stable inflation outlook has been interpreted positively by crypto investors, as it reduces immediate pressure on the Federal Reserve to hike interest rates aggressively, creating favorable conditions for BTC and broader digital asset markets.
BTC Reacts to Inflation Data and Profit-Taking
Following the data release, BTC briefly surged to $110,700, highlighting a strong market reaction to the inflation report. However, the upward momentum was short-lived, with the price dropping to around $109,000 amid profit-taking by whales.
Traders are closely monitoring these levels, as BTC faces continued risk of intraday lows despite the PCE-driven optimism. The market remains sensitive to both macroeconomic signals and institutional trading activity.
Fed Rate Cut Speculation Remains High
CME FedWatch data indicates an 87.2% probability of a 25 basis points (bps) rate cut at the September FOMC meeting. Fed Chair Jerome Powell and FOMC members, including John Williams and Chris Waller, have suggested that a rate cut may be warranted, particularly if labor market data weakens further.
The July PCE report strengthens the case for a potential Fed rate reduction, as inflation remains moderate while downside risks to employment persist. Market participants see this as a potential tailwind for BTC and other risk assets heading into September.
Also Read: Bitcoin Price Holds $112K as 90% of Supply in Profit — Can BTC Break $115K Next?
While Bitcoin’s rally was short-lived, the July PCE inflation data underscores a stable macroeconomic backdrop that could support future crypto gains. Traders will continue to watch BTC’s price action closely, as Fed rate expectations and market sentiment remain key drivers.
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Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
