US Core PCE within market expectations in July, Bitcoin price likely to begin recovery

  • US Core Personal Consumption Expenditures Price Index rose 0.2% MoM and 4.2% YoY in July.
  • The Federal Reserve Chair has hinted at future interest rate hikes in his speech at the Jackson Hole Symposium. 
  • Bitcoin price is likely to recover in light of the PCE inflation data.

The Federal Reserve’s preferred measure of inflation, Core PCE, excludes food and energy prices that are influenced by global factors. Core PCE rose  4.2% YoY in July, according to the US Bureau of Economic Analysis report on Thursday. 

The Core PCE reading is within market expectations and below Fed Chair Powell’s preliminary estimate of 4.3% for July.

Also read: Breaking: US Core PCE inflation rises to 4.2% as anticipated

What Core PCE Price Index reading for July means for Bitcoin price

The Core PCE Price Index reading for July was in line with the market expectation, rising 4.2% over the 12 months to July. While this is a slightly stronger pace than the 4.1% increase recorded in June, risk assets like Bitcoin benefit from the possibility that inflation is cooling down in the US.

Fed Chairman Jerome Powell had reiterated in his recent speech at Jackson Hole that officials watch Core PCE more closely, for an outlook on US inflation and offered a preliminary estimate of 4.3% for July’s Core PCE rate. The actual reading came 0.1% below the estimate, in line with the expectations of economists. 

Economists surveyed by FactSet – a research system that provides inputs to Wall Street professionals – had predicted the Core Annual PCE inflation rate to bump up to 4.2%, signaling that inflation is likely cooling down after a year of interest rate hikes.

Moreover, this reduces the likelihood of an interest rate hike in September, easing the selling pressure on risk assets like Bitcoin and altcoins.

Bitcoin is likely to begin its recovery and eye resistance at the $28,000 level, in light of the recent data release. In the event of an interest rate hike in September, BTC’s recovery rally to the August monthly high above the key $30,000 level could be jeopardized. 

BTC/USDT five minute price chart

BTC/USDT five minute price chart on Binance

Bitcoin price is currently influenced by other factors, like SEC’s appeal against Grayscale’s win in the lawsuit and macroeconomic releases like Nonfarm Payrolls for July. It remains to be seen whether BTC price yields gains for holders or retraces to test support at the $27,000 level.

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.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

Dogecoin price bullish outlook intensifies as DOGE turns 10

Dogecoin price bullish outlook intensifies as DOGE turns 10

Dogecoin price has sustained the bullish outlook since October 18, when the broader market turned green, leading meme coins in an uptrend, which is no mean feat. The 65% climb has ushered the dog-themed cryptocurrency to its tenth birthday since its official launch on December 6, 2013.

More Dogecoin News

Bitcoin-based meme coin ORDI price action wobbles after 1,100% rally

Bitcoin-based meme coin ORDI price action wobbles after 1,100% rally

The Bitcoin-based BRC-20 meme coin, which had people confused as being an actual valuable token, is now slowly creeping up to that status. ORDI price rise over the past couple of days has been astonishing, and with BTC driving the price and crossing $44,000, ORDI is also gaining rapidly. But not for long.

More Ordi News

Arbitrum price veers as hard fork proposal receives 99.84% votes in favor

Arbitrum price veers as hard fork proposal receives 99.84% votes in favor

Arbitrum's price surpassed expectations as the altcoin managed to restrict the fluctuation over the past 24 hours. This is because ARB was forecasted to rally following the result of the proposal to essentially hard-fork the chain.

More Arbitrum News

Bitcoin price hits $44,000 as Coinbase CEO speculates BTC could be key to extending Western civilization

Bitcoin price hits $44,000 as Coinbase CEO speculates BTC could be key to extending Western civilization

Bitcoin (BTC) price has revisited levels last seen in April 2022, prior to the collapse of the Terra UST ecosystem. Its foray above the $42,000 psychological level has market watchers enthused.

More Bitcoin News

Analyzing potential $30k corrections ahead of BTC ETF approval

Analyzing potential $30k corrections ahead of BTC ETF approval

Bitcoin has slowed down its 2023 bull rally as it approaches the $37,000 level. After three weeks of consolidating around this level, BTC shows no directional bias whatsoever. Some investors speculate this could be an upward-sloping accumulation that leads to a $40,000 rally.

Read full analysis