September PCE inflation in the US was 2.8%. How does this affect Bitcoin?

Source: CritpoTendencia Original Title: September PCE Inflation in the US Marked 2.8%—How Does This Affect Bitcoin? Original Link: This Friday, the United States Department of Labor released the delayed report for September PCE inflation in the country. This is the Federal Reserve’s preferred inflation index when making monetary policy decisions. Below, we analyze how this affects Bitcoin and the rest of the cryptocurrencies just 5 days before the Fed meeting.

According to the report, PCE inflation reached 2.8% year-over-year in September and 0.3% month-over-month. Both figures were in line with analysts’ estimates. Meanwhile, the core PCE (which excludes energy and food with volatile prices) rose 2.8% year-over-year and 0.2% month-over-month. In this last case, it was 0.1% below forecasts.

It’s worth mentioning that this report is published with a delay as a consequence of the recent government shutdown in the US. However, it is of particular interest, considering that next Wednesday it will be revealed whether the Fed will cut the interest rate or not. The central bank bases its decision on reports like this.

The fact that the core PCE is better than expected on a monthly basis should be considered positive for equities because it opens the door to a rate cut. An interest rate cut could once again stimulate risk appetite among investors, and this would positively affect Bitcoin—at least in theory.

Bitcoin Price Has Yet to React to PCE Inflation Data

Although the September PCE inflation data can be considered positive for BTC’s price, it has not yet reacted. On the contrary, it continues the downward trend of recent hours.

At the time of writing, the largest digital currency is showing a -1.30% return over 24 hours and -1.43% on the weekly chart. This performance reflects a price of $90,978 per coin.

There are two main reasons to understand Bitcoin’s lack of reaction to this inflation data in the US economy. The first is that this is outdated data at a time when inflation numbers are likely to be completely different. Simply put, the report is from a quarter ago, while BTC investors generally react to more current data.

The other reason is that investors have not yet fully digested the news and are waiting for the reaction of other assets. This could suggest that the coin’s price may rise in the coming hours or even over the weekend. The below-expectation price performance could be seen by the Fed as a reason to cut the interest rate by 25 basis points.

All of this could translate into a potential short-term rise for Bitcoin.