The U.S. PCE data is simply an important thermometer for the government to see whether 'ordinary people are paying higher prices for goods.' Once it's released, the market is most concerned about: inflation (is money losing value)? And inflation data directly affects whether the Federal Reserve (the U.S. central bank) will 'raise or lower interest rates.'
What does this have to do with Bitcoin and gold? It matters a lot! Because both fear the same thing: high interest rates!
Situation 1: PCE data higher than expected (inflation is hotter than expected🔥)
What does the Federal Reserve think? 'Oh dear, things are still so expensive? It seems we can't rush to cut rates, interest rates need to hold steady for a while, or maybe even increase!'
Impact on Bitcoin (BTC):
High probability of a drop! Why?
High interest rates = saving money, buying government bonds is more cost-effective. Bitcoin has no interest, holding it leads to 'loss' (high opportunity cost).
High interest rates = everyone finds it hard to borrow money and spends cautiously, high-risk assets (like Bitcoin) are easily sold off.
High interest rates = the dollar is usually worth more (strengthens), Bitcoin is bought with dollars, thus appearing more expensive.
Impact on gold:
It can also drop, but might be a bit more resilient than Bitcoin. Why?
Also fears high interest rates (holding gold also earns no interest).
The strong dollar makes gold seem expensive.
However! Gold is still a traditional 'safe haven.' If high inflation makes people worry that 'money is becoming less valuable' or 'the economy is going to collapse,' it might lead some to buy gold for reassurance. Therefore, gold might not drop as sharply as Bitcoin.
Situation 2: PCE data lower than expected (inflation cools down❄️)
What does the Federal Reserve think? 'Oh? Things aren't rising in price much? Then we can arrange for interest rate cuts sooner!'
Impact on Bitcoin (BTC):
High probability of a rise! Why?
Interest rate cut expectations = interest rates will be low = saving money to buy government bonds is no longer appealing! Bitcoin, with no interest, becomes more attractive.
Interest rate cut expectations = more money in the market, everyone dares to take more risks = things like Bitcoin that are 'stimulating' become more popular.
Interest rate cut expectations = U.S. dollar likely to weaken (soften), Bitcoin purchased with dollars seems cheaper.
Impact on gold:
It can also rise! Why?
Interest rate cut expectations = interest rates will be low = the 'no interest' disadvantage of gold diminishes, greatly increasing its appeal! This is the environment gold loves most.
The U.S. dollar weakens, making gold seem cheaper.
If inflation cools down amidst some worries about the economy (fear of recession), gold as a 'safe haven' can also attract buyers.
To summarize briefly
PCE data hot (high inflation) → market fears interest rate hikes/no cuts → both Bitcoin and gold are likely to drop, but gold might be slightly more 'durable.'
PCE data cool (low inflation) → market is happy about interest rate cuts → both Bitcoin and gold are likely to rise, with gold being potentially more 'stable.'
Bitcoin is like a 'young person who loves to party': it reacts particularly quickly and dramatically to 'how much money is there' and 'is market sentiment high or low' (large fluctuations in price).
Gold is like a 'steady uncle': although it also likes low interest rate environments, at critical moments (panic, risk aversion) it is more reliable, with relatively smaller fluctuations.
The key point: the market is speculating on the 'expectation difference'! The data itself is not absolute; what's crucial is whether it is better or worse than what everyone **previously guessed**. For instance, if everyone expected high inflation but the data comes out only slightly high, the market might actually breathe a sigh of relief (considering it 'not so bad'), and prices might even rise!
So the next time you see news saying 'U.S. PCE data released,' you'll know:
Data higher than expected? → Bitcoin and gold might take a 'hit.'
Data lower than expected? → Bitcoin and gold might 'bounce a bit.'
Bitcoin jumps higher and falls harder; gold is relatively 'gentler,' but the overall direction is basically the same.