PCE Watch: Crypto at the Mercy of the Fed’s Favorite Inflation Metric
Headline Takeaways (July 2025 PCE Data):
Headline PCE rose 0.2% month-over-month and 2.6% year-over-year—right in line with forecasts.
Core PCE (excluding food & energy) climbed 0.3% MoM, 2.9% YoY, hitting the highest annual reading since February.
What Markets Are Saying
Muted Reactions, Dovish Hopes Alive Despite elevated core inflation, markets remain optimistic: S&P futures steadied, Treasury yields ticked up modestly, and the U.S. dollar held firm. This data seems unlikely to derail expectations for a September Fed rate cut—especially if upcoming CPI/PPI and jobs reports stay benign.
Weak Jobs = Strong Case for Cutting Rates Fed officials are now focusing more on labor market softness. As long as the August jobs report (due Sept 5) remains weak, the case for a rate reduction at the Sept 16–17 Fed meeting strengthens.
Consumer Spending Holds Up July spending grew 0.3%, driven by rising wages (+0.6% non-inflation-adjusted), signaling resilient demand even amid rising prices.
What This Means for Crypto Traders
Macro + Crypto = Volatility The PCE print sets the tone: if inflation remains tame, rate-cut expectations may lift crypto. If not, expect volatility.
Bitcoin Eyes Key Levels BTC dipped under ~$109,500 ahead of the PCE release, pressured by “spoofy” whale activity. Watch how it handles the $114K weekly close—a break below could pull it toward $103K.
The Macro → Crypto Chain
Event / Metric Implication for Crypto
Headline & Core PCE (on target) Markets stay calm; rate cut hopes intact
Weak Employment Data Strengthens case for dovish Fed push
Consumer Spending Resilience Reinforces economic stability narrative
Price Pressure vs Rate Relief Sets stage for volatile trading
BTC Key Levels ($114K / $103K) Tactical zones for crypto positioning
