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

Bitcoin shrugs off new U.S. inflation woes

Data from Coin­tele­graph Mar­kets Pro and Trad­ingView showed BTC/USD near­ing $27,000 on Bitstamp.

The pair rose unex­pect­ed­ly after the day’s Per­son­al Con­sump­tion Expen­di­tures (PCE) data showed its first ris­es since Octo­ber 2022.

Such a read­ing should present a head­wind for risk assets, includ­ing cryp­to, as it implies that infla­tion remains per­sis­tent and that more finan­cial tight­en­ing may be required to tame it.

“This is a major set­back to the Fed’s fight against infla­tion,” finan­cial com­men­tary resource, The Kobeis­si Let­ter, wrote in part of a response.

Kobeis­si not­ed that expec­ta­tions for inter­est rate hikes from the Fed­er­al Reserve were “shift­ing rapid­ly” thanks to the PCE event.

Accord­ing to CME Group’s Fed­Watch Tool, the mar­ket now nar­row­ly favors a fresh hike in June, where­as before, it was more than 80% cer­tain that a pause would occur.

Finan­cial com­men­tor Tedtalks­macro mean­while acknowl­edged that the PCE gains were relative.

“US PCE data came in hot, above ana­lyst expec­ta­tions. On a 3‑month annu­alised basis, how­ev­er, core PCE print­ed sharply low­er… down to 4.2%,” he react­ed.

Cause for relief for traders mean­while came from accom­pa­ny­ing news that the Biden admin­is­tra­tion was near­ing a deal on the debt ceil­ing, with the dead­line now just days away.

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

DXY hits 10-week highs

Turn­ing to Bit­coin itself, Michaël van de Poppe, founder and CEO of trad­ing firm Eight, flagged the poten­tial for upside continuation.

Relat­ed: Bit­coin los­ing its 200-week trend­line puts $20K in play — BTC price analysis

“That’s step one for Bit­coin, as we reclaim $26,600 and are look­ing for con­tin­u­a­tion towards the range highs,” he com­ment­ed on the day’s price action. 

“If the recent cor­rec­tion is devi­a­tion, we might break to $29,000 next week.”

He cau­tioned that PCE was “not a great sign” for risk assets, not­ing the knee-jerk reac­tion for U.S. dol­lar strength — tra­di­tion­al­ly inverse­ly cor­re­lat­ed with crypto.

The U.S. dol­lar index (DXY) hit 104.4 on the day, its high­est lev­els since March 17.

“Some con­sol­i­da­tion fol­low­ing this month’s ral­ly would be healthy for the dol­lar,” pop­u­lar trad­er Justin Ben­nett wrote in a ded­i­cat­ed forecast. 

“But a dai­ly and week­ly close above 104.20 opens up 105.00 ear­ly next week. The only thing that would turn me bear­ish on the DXY is a dai­ly close below 103.50.”

Bit­coin (BTC) made snap gains at the May 26 Wall Street open as Unit­ed States macro­eco­nom­ic data deliv­ered a nasty surprise.

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This arti­cle does not con­tain invest­ment advice or rec­om­men­da­tions. Every invest­ment and trad­ing move involves risk, and read­ers should con­duct their own research when mak­ing a decision.