September PCE inflation in the US was 2.8%. How does this affect Bitcoin?

Source: CritpoTendencia Original Title: September PCE Inflation in the U.S. Marked 2.8%—How Does This Affect Bitcoin? Original Link: This Friday, the U.S. Department of Labor released the delayed report on September PCE inflation in the country. This is the Federal Reserve’s preferred inflation index when making monetary policy decisions. Below, we analyze how this affects Bitcoin and the rest of the cryptocurrencies just 5 days before the Fed meeting.

According to the aforementioned report, PCE inflation reached 2.8% year-over-year in September and 0.3% month-over-month. Both figures were in line with analysts’ estimates. Meanwhile, the core PCE (which excludes energy and foods with volatile prices) rose 2.8% year-over-year and 0.2% month-over-month. In the latter case, it was 0.1% below forecasts.

It’s worth mentioning that this report is published with a delay due to the recent government shutdown in the U.S. However, it is of particular interest considering that next Wednesday it will be revealed whether the Fed will cut the interest rate or not. For that decision, the central bank relies on reports like this one.

The fact that the core PCE is better than expected on a monthly basis should be considered positive for equities because it opens the door to a rate cut. A cut to the interest rate could once again stimulate risk appetite among investors, and this positively affects Bitcoin, at least in theory.

Bitcoin Price Still Hasn’t Reacted to PCE Inflation Data

Although the September PCE inflation data could be seen as positive for BTC’s price, it has not reacted so far. On the contrary, it continues the downward trend of the past few hours.

At the time of writing, the largest digital currency is showing a -1.30% performance in 24 hours and -1.43% on the weekly chart. This performance reflects a price of $90,978 per coin.

There are two main reasons to understand Bitcoin’s lackluster reaction to these inflation data in the U.S. economy. The first is that this is an outdated figure at a time when inflation numbers are likely very different. Simply put, the report is from a quarter ago, while BTC investors generally react to more current data.

The other reason is that investors have not yet fully digested the news and are waiting for the reaction from other assets. This could suggest that the coin’s price might rise in the next few hours or even over the weekend. The price performance falling short of expectations could be seen by the Fed as a reason to cut interest rates by 25 basis points.

This can be confirmed with the November private employment data, which contracted by 32,000 jobs, according to the latest ADP report. All of this could translate into a potential short-term rally for Bitcoin.