Crypto prices are facing significant selling pressure as Thursday’s hot PCE data has now priced out the possibility of two rate cuts this year.
The Personal Consumption Expenditures (PCE) index rose 2.6% year-over-year in June, slightly above the 2.5% forecast. Core PCE, which excludes food and energy, increased 2.8% YoY, also exceeding the expected 2.7%.
The Fed’s preferred inflation gauge has now risen for two straight months, signalling persistent price pressures.
Moreover, US President Donald Trump has announced sweeping new tariffs across more than 50 countries, including 35% on Canada, 39% on Switzerland, 25% on India and 20% on Vietnam and Taiwan, which are expected to add to the inflationary pressures.
With the Fed Chair Jerome Powell already adopting a slightly hawkish stance in Wednesday’s FOMC, the market is no longer pricing in two rate cuts this year.
Crypto prices are responding negatively to this double whammy on Friday, with the Bitcoin price falling below $115,000, raising concerns about whether the bull market is over. However, on-chain data and a broader macroeconomic picture suggest that these fears are largely overblown.
PCE Data Ticks Higher, New Trump Tariffs Add To Market Uncertainty
The Personal Consumption Expenditures (PCE) is the Federal Reserve’s favoured inflation metric. It is, therefore, not good news that it has ticked higher for two months in a row.
The Wall Street Journal’s Chief Economics Correspondent, Nick Timiraos, notes that by some measures, core PCE inflation now appears worse than it did when the Fed began its rate-cutting cycle.
The annual PCE inflation currently stands at 2.6%, the highest level since February, while core PCE has ticked up to 2.8%.
With US President Donald Trump doubling down on his tariff policies, announcing sweeping new duties on Thursday, there is a possibility that PCE continues to surge higher.
Notably, the CME FedWatch, which tracks the probabilities of changes to the Fed rate, is no longer pricing in two rate cuts this year. A single quarter-point interest rate cut at the October FOMC meeting is now the odds-on scenario.
For the uninitiated, the Federal Reserve’s restrictive monetary policy often results in bearish headwinds on the crypto market.
Is The Crypto Bull Market Over?
The fears of the crypto bull market being over are likely overblown.
For starters, there is a strong chance that Trump’s tariffs trigger a one-time increase in prices. This wouldn’t be classified as inflation, which refers to a sustained and continuous rise in prices over time.
Even Fed Chair Powell believes that tariff-induced inflation could potentially be “transitory”.
Moreover, global liquidity continues to climb. The Global M2 money supply, which shows a strong correlation with the Bitcoin price, continues to indicate that the largest cryptocurrency will hit $150,000 in the short term.
Indeed, whales continue to buy the dip, while BlackRock’s spot Bitcoin and Ethereum ETFs see steady demand.
The current crypto crash is likely induced by short-term profit-taking, which would mean that a new bull run is on the horizon.
Best Crypto To Buy Now
The Bitcoin price has fallen below $115,000, Ethereum below $3,700 and XRP below $3. Today could be an excellent time to buy large-cap assets, especially for sidelined buyers.
Among the mid-cap altcoins, SPX6900 and Bonk are attractive buys. For instance, Bonk is already forming a bullish divergence in the 4-hour chart, which could result in a strong bounce back.
The Dogecoin price continues to hold above the $0.20 support as well, making it a high-upside investment for the rest of the year.
Smart money investors continue to invest in low-cap meme coins. The new BTC Layer-2 coin, Bitcoin Hyper (HYPER), reached the $6 million milestone in its viral presale on Thursday.
Layer-2 coins have high upside, and the top projects tend to reach multibillion-dollar valuations. Unsurprisingly, many are calling HYPER the next 100x crypto.
Similarly, TOKEN6900 has emerged as a newer, low-cap alternative to SPX6900. With a $5 million hard cap on its presale, it is a true small-cap.
Much like SPX, Fartcoin and USELESS, TOKEN6900 is a utility-less meme coin, which experts believe could be among the best cryptos to buy now.
Visit TOKEN6900 Presale
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