Key facts
- Bitcoin neared $85,000 on September 30, trading at $84,813.74.
- US August PCE inflation rose 0.3% month-on-month.
- US August core PCE inflation rose 0.2% month-on-month.
- Annual headline PCE was 3.4%, and annual core PCE was 3.0%.
- Consumer spending and personal income showed solid increases in August.
- Markets assigned a 52.9% chance of unchanged Fed rates at the October 28 meeting.
Bitcoin approached the $85,000 mark on Wednesday, September 30, buoyed by a US inflation report that indicated a slowdown in price pressures, potentially influencing the Federal Reserve's monetary policy decisions.
The cryptocurrency was trading at $84,813.74, up 0.5% for the day, continuing a recovery from mid-September lows around $76,000. Bitcoin had previously broken above $80,000 around September 19 and briefly touched $86,000 on September 21, before consolidating in a range between $83,000 and $85,000 since September 23.
The latest US Personal Consumption Expenditures (PCE) price index report for August showed a 0.3% increase from July, below market expectations. The core PCE index, excluding food and energy, rose 0.2% month-on-month. Annually, headline PCE stood at 3.4% and core PCE at 3.0%, both below market forecasts of 3.7% and 3.3% respectively.
Despite the easing inflation figures, the report also indicated robust consumer demand. Personal consumption expenditures rose 0.9% in August, with real personal consumption expenditures increasing by 0.6%. Personal income and disposable personal income saw modest increases of 0.2% and 0.3% respectively. This combination of cooling inflation and strong spending presents a mixed outlook for the Federal Reserve.
Market expectations for the Federal Reserve's October 28 FOMC meeting, as reflected in CME FedWatch data, showed a 52.9% probability of rates remaining unchanged at 3.75%-4.00%, and a 47.1% probability of a 25 basis point hike to 4.00%-4.25%. Traders are adjusting their rate expectations in light of the economic data and Bitcoin's price movements.