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The US Personal Consumption Expenditures Price Index (PCE) is considered an important indicator of inflation in the economy. Therefore, it is closely monitored by the Federal Reserve (Fed). Not only the Fed but also the cryptocurrency world closely follows this data. The data was just released.
How Did the PCE Data Shape Up?
The US Personal Consumption Expenditures Price Index (PCE) was just announced. The reported data came in at 2.5%. The expectation was for it to be 2.6%. We see that the data came in below expectations. After the data release, the price of Bitcoin moved, and BTC reached the level of $59,822. So why was this data important for Bitcoin and cryptocurrency investors?
As is known, a rise in the PCE usually indicates increasing inflationary pressures, which may lead the Fed to decide to raise interest rates. An increase in interest rates puts pressure on traditional financial markets and generally leads to a flight from risky assets. If the PCE comes in low, it allows the Fed to consider lowering interest rates.
If PCE Increases
If the PCE shows an increase, investors may generally turn to the dollar, which is considered a safe haven. Such a development could inevitably lead to a decrease in the price of risky assets like Bitcoin. Although Bitcoin is seen by some investors as a hedge against inflation during periods of high inflation, market uncertainty can cause fluctuations in Bitcoin’s price.
Changes in the PCE index can affect Bitcoin’s price. Therefore, the cryptocurrency community closely follows PCE data. Since the PCE data came in low, attention is now focused on the Fed’s potential interest rate cuts.
