- Bitcoin price winds around $28,000 as traders anticipate the release of US Core PCE Price Index data on August 31.
- The consensus is that the Core PCE inflation will rise by 0.1% and come in at 4.2% for July.
- Being the Fed's preferred gauge of inflation, PCE numbers could influence expectations of further rate hikes in the US.
Bitcoin price rallied to $28,100 on Tuesday, in response to Grayscale’s victory against the Securities and Exchange Commission (SEC) in its spot Bitcoin ETF lawsuit. Since then, BTC price wiped out its gains, declining to $27,300 as traders exercised caution ahead of the August 31 release of US Core PCE Price Index for July.
The data could make or break Bitcoin’s run up to the $30,000 level as US Core PCE is considered the Federal Reserve’s preferred inflation gauge and the market expectation is for an annual rate of 4.2% for July, against Fed’s 2% target for inflation.
Fed’s preferred inflation gauge could determine the direction of Bitcoin price trend
The US Bureau of Economic Analysis (BEA) is set to release Core Personal Consumption Expenditure (PCE) Price Index on Thursday, August 31 at 12:30 GMT. As we move closer to the data release, the market’s expectation is a 0.1% increase to send Core PCE YoY rate for July to 4.2%.
An increase above market expectations adds to the likelihood of an interest rate hike by the Fed in September. If the increase in Core PCE rate is 0.1% or lower, it points at a slowdown in inflation and less likelihood of interest rate hikes.
Bitcoin traders are likely to benefit from a slowdown in inflation, as leverage becomes cheaper and capital inflow to BTC and risk assets increases.
At the time of writing, BTC price is up 5% over the past week and noted a 1.27% drop on the day, on Binance.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.