• US core PCE is expected to come in at 4.6% YoY and the MoM reading is expected to print 0.3%. 
  • The PCE index is considered a reliable indicator of inflation, therefore the reading could make or break investor sentiment towards risk assets like BTC. 
  • Bitcoin price started its recovery, climbing past the $26,400 level on Thursday. 

US core Personal Consumption Expenditure (PCE) is a measure that captures inflation across a wide range of consumer expenses. The core PCE is considered a reliable indicator of inflation and the measure influences market participants’ sentiment towards risk assets like Bitcoin and cryptocurrencies. 

The US core PCE expectation is 4.6% YoY and 0.3% MoM according to data from the FXStreet economic calendar. The latest PCE data point is scheduled for release on Friday, May 26, at 14:30 GMT.

Also read: Spotlight on PCE inflation and Fed Minutes after Powell hints at pause [Video]

US PCE expectations and how it influences Bitcoin price rally

The US PCE price index measures changes in consumer spending. The statistic is released monthly by the US Bureau of Economic Analysis and it influences the sentiment of traders towards US equities and risk assets. 

If core PCE (excluding food and energy prices) comes in at market expectations or lower, it is considered bearish for the US Dollar index. Along the same lines a hot core PCE reading, above expectations, is bullish for the US Dollar index. 

An event that is bearish for the USD is typically bullish for cryptocurrencies like Bitcoin, as it makes it cheaper for investors to acquire the asset and fuels demand in the short-term. A core PCE reading at the market expectation of 4.6% YoY and 0.3% MoM could therefore fuel demand for Bitcoin and strengthen the asset’s recovery rally. 

Since 2012, the PCE index has guided the Federal Reserve’s policy decisions, therefore the reading is key to determine whether the central bank’s measures are reining in inflation at the desired pace. 

Will Bitcoin price rally to $30,000?

The $30,000 is an important psychological barrier for Bitcoin; it is key to the asset’s price recovery in the ongoing market cycle. BTC climbed past the $26,400 on Thursday, marking a 3% recovery from the $25,888 level earlier today.

Ahead of the US PCE release, traders are driving Bitcoin price higher, hoping that core PCE remains the same YoY. 

Bitcoin price is in an upward trend that started in March 2023. BTC is currently trading below two long-term Exponential Moving Averages, the 50-day and 200-day at $26,820 and $27,501. 

Bitcoin needs to flip the two long-term EMAs into support to resume its recovery, as it targets the $30,000 level. 

There are two resistances on the path to $30,000, at $28,459 and $29,480. These two levels have acted as resistances throughout April and May 2023. 

BTC/USD four-hour price chart

BTC/USD four-hour price chart

A decline below the May low of $25,804 could invalidate the bullish thesis for the asset’s price. 


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