Bitcoin ignores the new inflationary problems of the US.
Data from Cointelegraph Markets Pro and TradingView showed the BTC/USD pair nearing $27,000 on Bitstamp.
The pair rose unexpectedly after Personal Consumption Expenditure (PCE) data for the day showed its first gains since October 2022.
Such a reading should present a headwind for risk assets, including cryptocurrencies, as it implies that inflation remains persistent and further financial tightening may be needed to control it.
“This is a huge setback for the Fed’s fight against inflation”, wrote in part a response to the financial commentary resource The Kobeissi Letter.
Kobeissi noted that expectations for interest rate hikes by the Federal Reserve were “changing rapidly” thanks to the PCE event.
According to CME Group’s FedWatch Tool, the market is now leaning narrowly in favor of a further rise in June, whereas before it was more than 80% sure that there would be a pause.
For his part, financial commentator Tedtalksmacro acknowledged that PCE gains were relative.
“US PCE data beat analysts’ expectations. However, on a 3-month annualized basis, core PCE fell sharply… to 4.2%”, commented.
The news that the Biden administration is about to reach a debt ceiling agreement, just days from the deadline, was a source of relief for traders.
The S&P 500 Index and Nasdaq Composite Index were up 1% and 1.65%, respectively, at the time of writing.
DXY hits 10-week highs
As for Bitcoin itself, Michaël van de Poppe, founder and CEO of trading firm Eight, highlighted the upside potential.
“That is the first step for Bitcoin as it recaptures $26,600 and looks for continuation towards the range highs”, commented on the price action of the day.
“If the recent correction is a deviation, we could go to $29,000 next week.”
He warned that PCE was not “a great sign” for risk assets, pointing to the knee-jerk reaction of strength in the US dollar, traditionally inversely correlated with cryptocurrencies.
The US dollar index (DXY) hit 104.4 points on the day, its highest level since March 17.
“Some consolidation after this month’s rally would be healthy for the dollar,” popular trader Justin Bennett wrote in a dedicated forecast.
“But a daily and weekly close above 104.20 opens 105.00 early next week. The only thing that would turn me bearish on the DXY is a daily close below 103.50.”
Bitcoin (BTC) rallied at the open on Wall Street on May 26, when macroeconomic data from the United States delivered a nasty surprise.
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