• The Personal Consumption Expenditure Price Index (PCE) increased by 0.6% in January, up 4.7% from a year ago, signaling the potential for further rate hikes by the Fed which could impact the crypto market.
• U.S. equities markets and crypto markets took a hit after the PCE data release, while Bitcoin dropped below $24K and the overall crypto market cap fell by over 3%.
• If the Fed takes a hawkish stance in the March meeting due to high inflation rate in January, it could slow down recent uptrend momentum seen in crypto markets.
What is PCE?
The Personal Consumption Expenditure (PCE) Price Index is preferred by Federal Reserve to gauge inflation as it has broader scope and ability to track spending behavior along with how price changes influence it. It also tracks price changes and inflation over time more accurately than the Consumer Price Index (CPI).
Impact of PCE Data Release on Financial Markets
U.S. equities markets closed in red on Friday (24 February) and Bitcoin saw over $45 million worth of long positions wrecked in last 24 hours after PCE data was released showing an increase of 0.6%, up 4.7% from a year ago. Overall cryptocurrency market cap dropped from $1.1T to $1.02T between Tuesday (February 21) and at the time of writing according to data on TradingView.
Fed’s Potential Response
High inflation rate could push Federal Reserve to consider hiking rates further, thus confirming higher-for-longer rate narrative that spread market uncertainty recently which could slow down recent uptrend momentum seen in crypto markets if taken into action during March meeting .
Crypto Market’s Performance After Data Release
US equity markets closed at red on Friday (24 February), according to Google Finance Nasdaq and S&P 500 declined by 1.69% and 1.05%, respectively whereas Bitcoin dropped below $24K,and overall cryptocurrency market cap fell by over 3%.
What Does March Hold For Crypto?
If Federal Reserve takes hawkish stance due to high inflation rate then recent uptrend momentum seen in past two months could be slowed down as breaking below psychological level of $23K would cause major corrections in crypto market prices consequently wiping out most of gains made during said period
Comments are closed.