Key facts: A day of high volatility is expected for bitcoin. Investors in bitcoin ETFs are piling up, waiting for a bullish October. Today at 12:30 PM (UTC time) the United States Personal Consumption Expenditure (PCE) Price Index will be released. This report is key to evaluating inflation in financial and economic power, so its impact could be felt in the markets, including bitcoin (BTC) and cryptocurrencies.
The PCE is the Federal Reserve's favorite measure (Fed), Central Bank of the United States, to establish monetary policy. The reason for this is that it is based on inflation of products and services consumed by households, rather than select elements such as the consumer price index (CPI). Therefore, its result is key for the size and pace of the next interest rate cuts. In the event of a reduction in PCE or around expectations, risk markets such as stocks and cryptoassets could react optimistically. But, in an opposite scenario, they can be hit. Given this last possibility, it is possible that the demand for assets considered safe havens such as gold or bitcoin will increase. Gold and the S&P 500 (SPX), an index that compiles the shares of the main 500 companies listed in the United States, They set new historical maximum prices yesterday. Meanwhile, bitcoin has experienced a substantial rise, although it remains in the lateral range it maintained six months ago after reaching a new price record, as the graph shows.
Bitcoin price so far in 2024. Source: TradingView.
Appetite to invest in markets in general is growing
The general rise of the markets reflects a search by investors to increase the value of their capital in the face of greater liquidity. The Fed cut interest rates last week for the first time in more than four years. In addition, China also announced reductions in its monetary policy. In this way, an increase in capital to invest has been generated. However, given the fears of recession due to the cooling of the labor market in the United States, the development of inflation is key. If the economy is affected, assets considered risky could change downwards, while safe haven assets continue to rise. Therefore, High volatility is to be expected based on how the PCE is perceived by the markets and upcoming economic development data.although many expect markets in general to continue to be motivated by increased liquidity.