Bitcoin nears $27K despite ‘hot’ PCE data sparking June rate hike bets

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Bitcoin (BTC) soared in Wall Street trading on May 26 as US macroeconomic data delivered a nasty surprise.

Bitstamp’s BTC/USD hourly candlestick chart. Source: TradingView

Bitcoin Ignores New U.S. Inflation Problems

Cointelegraph Markets Pro and TradingView Bitstamp showed BTC/USD approaching $27,000.

It rose unexpectedly after today’s personal consumption expenditures (PCE) data rose for the first time since October 2022.

Such a view should be a headwind for risky assets, including cryptocurrencies, as it suggests that inflation will continue to persist and that further monetary tightening may be needed to contain inflation. .

‘This is a big setback to the Fed’s fight against inflation,’ says financial commentary The Kobeissi Letter I have written part of the reply.

Coveisi said the PCE event has caused a “rapid shift” in Fed rate hike expectations.

According to CME Group fedwatch toolsCurrently, the market is narrowly in favor of another rate hike in June, while previously there was more than 80% certainty that rate hikes would be paused.

Fed’s target interest rate probability chart.Source: CME Group

On the other hand, financial commentator Ted Torksmacro acknowledged that the rise in PCE is relative.

“U.S. PCE data performed well, beating analyst expectations. However, on a three-month annualized basis, core PCE declined significantly, down to 4.2%.” reacted.

Traders were relieved, however, by the accompanying news that the Biden administration was nearing a deal on a debt ceiling, with the deadline just days away.

At the time of writing, the S&P 500 and Nasdaq Composite were up 1% and 1.65%, respectively.

DXY hits 10-week high

Turning to Bitcoin itself, Michael van de Poppe, founder and CEO of trading firm Eight, warned that the rally could continue.

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“This is the first step for Bitcoin. We have regained $26,600 and are looking for a continuation towards the high end of the range,” he said. commented about the price movements of the day.

“If the recent correction is a divergence, a breakout of $29,000 is possible next week.”

BTC/USD annotated chart. Source: Michael van de Poppe/Twitter

He warned that PCE “does not bode well” for risk assets, pointing to the inevitable reaction to a stronger US dollar, which has traditionally been inversely correlated with cryptocurrencies.

The US dollar index (DXY) hit 104.4 on the day, its highest level since March 17.

Popular trader Justin Bennett: Some consolidation after this month’s rally would be healthy for the dollar I have written with a dedicated forecast.

“But if the daily and weekly closes are above 104.20, the week will start at 105.00.

1-day candlestick chart of the US Dollar Index (DXY). Source: TradingView

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This article does not contain investment advice or recommendations. Any investment or trading move involves risk and readers should conduct their own research before making any decision.