BTC surpasses $66K after release of PCE data

Bitcoin rose above $66,000 after analysts stated that Personal Consumption Expenditures (PCE) data had reinforced expectations of a continued dovish Fed policy stance.

BTC had retreated back below that level at 2 pm ET, but remained slightly up from a day ago.   

The surge past $66,000 came a little over an hour after the US Bureau of Economic Analysis published the August PCE data. The Federal Reserve’s preferred inflation gauge, the PCE figures showed a slight increase of 0.1% from July (rising 2.2% year over year).

Morningstar senior economist Preston Caldwell had predicted a 0.15% month-over-month PCE boost. FactSet consensus estimates had pegged a 2.7% jump on an annual basis.

Any significant rise above estimates could have dampened the prospect of further rate cuts by the Fed, wrote Derren Nathan, head of equity research at Hargreaves Lansdown, in a Friday note. 

Read more: A look at central bank rate decisions around the world

“Today’s lower-than-expected PCE numbers have strengthened the dovish sentiment sparked by last week’s rate cut, fueling optimism that inflation pressures are cooling faster than anticipated,” said 21Shares crypto research strategist Matt Mena.

The US central bank’s current forecast suggests another half-point reduction by the end of 2024, Nathan said. 

The probability of a Fed rate cut amounting to 50 basis points at its November meeting was at nearly 57%, as of 2 pm ET — up from about 49% a day ago, CME Group data shows. The Fed has another meeting in December. 

Mena expects the stage is set for a BTC to possibly retest the range between $68,000 and $70,000 — noting other global factors at play, such as China’s recent liquidity injection.

Mena had noted that, as of early Friday, the CoinDesk 20 Index was up nearly 8% this week, compared to a less than 1% gain by the S&P 500. 

At 2 pm ET, BTC was up about 1% from 24 hours ago. The S&P 500 was roughly flat over that span. 

Mena added: “This highlights the growing confidence in BTC and digital assets as investors increasingly seek alternative stores of value and high-yield opportunities amid a favorable macroeconomic backdrop.”

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