On May 30, 2025 — This Friday (May 30) at 20:30 Eastern Time, the U.S. Department of Commerce will release the Core Personal Consumption Expenditures (Core PCE) Price Index, which is considered the Federal Reserve's most favored inflation indicator. The market generally expects the PCE to show a month-on-month increase of only 0.1% in April, with the year-on-year rate dropping to 2.2%, while the core PCE remains high at 2.6% year-on-year. The market expects almost 'zero rate cut' for the June interest rate meeting, but the possibility of the first rate cut in September has begun to brew. This round of policy direction is closely related to the future trend of digital gold, Bitcoin (BTC).
This month's PCE report is expected to show a month-on-month increase of 0.1% in the PCE price index, with the year-on-year growth rate dropping from 2.3% in March to 2.2%, approaching pre-pandemic levels. Excluding food and energy, the core PCE is also only 0.1% month-on-month, but remains high at 2.6% year-on-year. This data will directly affect the Federal Reserve's judgment on potential inflation trends.
The latest market pricing shows that the bets on interest rate cuts in the June 19 meeting by investment banks and futures contracts are nearly 'zero': investors expect the probability of a rate cut to be less than 10%.
Before the meeting on July 31, the market still expected the Federal Reserve to maintain the current interest rate range of 4.25%–4.50%, as most analysts believed the Fed would 'hold steady' until the second half of the year. By the meeting on September 18, as inflation data continued to decline, the market began to predict the possibility of two rate cuts of 25 basis points each, with the probability of the first rate cut in September rising to about 50%.
Although the PCE growth rate has slowed, the effects of tariffs from the Trump era have not yet fully manifested, and the price pressures on production materials and consumer goods may continue to ferment in the coming months. Meanwhile, several studies warn that there are signs of 'de-anchoring' in U.S. medium to long-term inflation expectations, with consumers and businesses expecting price rises in the future, posing the risk of forming a self-fulfilling inflation spiral. Considering the current data and market expectations, most brokerages and economists believe that the Federal Reserve is very likely to initiate its first round of rate cuts this September, thus releasing a signal of 'liquidity returning' to the market. If summer data continues to fall below expectations, the pace of rate cuts may accelerate.
As a representative of 'digital risk assets', Bitcoin is extremely sensitive to interest rate cycles. Historical data shows that every time the Federal Reserve enters an easing cycle, BTC often sees a major upward trend following the first rate cut:
During the Federal Reserve's rate cut cycle from 2019 to 2020, Bitcoin soared from about $3,000 to $12,000, an increase of over 300% (Fxempire)
After two emergency rate cuts in March 2020, although Bitcoin experienced a short-term correction of about 60%, its price subsequently increased by over 1,600% in the following year (CoinGecko)
In September 2024, after the Federal Reserve cut interest rates by half a percentage point, BTC rose approximately 4.5% in a single day (Reuters)
Advice for beginners entering the market:
Target and stop-loss:
It is recommended to accumulate BTC near $100,000 in batches, and not to enter immediately, as there are no policy drivers in the short term, and there is still room for decline!!!
The first round of upward targets looks towards the range of $120,000 to $150,000.
If it falls below the key support of $94,000, a stop-loss should be set to exit with no more than 10% of the position.
Risk control: Considering the current relatively weak liquidity and the fluctuations in tariffs and inflation data, it is recommended that the total position does not exceed 80% of the portfolio, and to set dynamic trailing stop-loss orders.
