Bitcoin gains after cooler August PCE reading trims rate-hike bets
Macro & Markets ·
A softer-than-forecast inflation print pushed the Fed's implied odds of an October rate hike lower, and bitcoin climbed in response.
The core Personal Consumption Expenditures index rose 3.0% year-over-year in August, below the 3.3% economists had penciled in, while the headline figure came in at 3.4% against expectations of 3.7%, according to cryptopotato.com. Bitcoin responded by climbing above $85,000, touching an intraday high of $85,598.94 before settling back to $84,376, a gain of about 0.9%, per decrypt.co. That move keeps the asset within the trading band it has occupied since its September breakout.
Odds tracked by CME's FedWatch tool now show a 62% probability the Fed holds rates steady in October versus a 37% chance of a 25-basis-point increase, a shift detailed by theblock.co. Fading rate-hike expectations generally support risk assets: higher rates raise borrowing costs, strengthen the dollar and boost returns on cash and bonds, while lower rates tend to loosen liquidity that can flow into assets like bitcoin. Even so, core inflation at 3.0% remains well above the Fed's 2% target, and elsewhere in markets the 10-year Treasury yield reached roughly 5.25%, its highest level since 2002, alongside a 12-year low in consumer confidence and job openings that missed forecasts.
The rally follows a volatile stretch for bitcoin, which fell below $75,000 in mid-September before a large ETF inflow day on September 21 and a round of short liquidations drove it to $87,354, its highest level since January. Over the past week the price has held mostly between about $82,600 and $85,600. A trend-strength measure, the Average Directional Index, sits at 41.9, a reading above the 25 threshold that typically signals an active trend, though the indicator can stay elevated even as price moves sideways after a sharp run-up.
Sentiment has not fully caught up to the price action. On the Myriad prediction market, traders assign just 7% odds that bitcoin surpasses its $126,199.63 record before 2027, a move that would require roughly a 50% gain in three months, while ETF inflows have cooled since a $2.4 billion week. Near-term, the same market prices 49% odds bitcoin holds above $84,000 and 21% odds it climbs past $86,000 by Monday.
What remains unclear is whether the softer PCE data marks a durable shift in Fed posture or a temporary pause, and whether bitcoin's calm trading range breaks decisively in either direction once the current trend signal fades.