The preferred inflation gauge by the Federal Reserve, the Personal Consumption Expenditures Price Index (PCE), came in hot for February but aligned with market estimates, according to the latest report from the US Bureau of Economic Analysis. Now, we officially have an increase in inflation in both the Consumer Price Index (CPI) and the Producer Price Index (PPI), as well as Personal Consumption Expenditures (PCE). Meanwhile, the price of Bitcoin remains under pressure ahead of Federal Reserve Chairman Jerome Powell’s speech.
US Personal Consumption Expenditure inflation slowed to 0.3% on a monthly basis in February after rising by 0.4% in January. Additionally, the core monthly Personal Consumption Expenditure index, which excludes food and energy, came in at 0.3%, down from a 0.5% increase in the previous month.
On the other hand, the annual rate of Personal Consumption Expenditure rose to 2.5% from 2.4%, the lowest since February 2021. Also, the annual core inflation for Personal Consumption Expenditure came in line with estimates at 2.8%, down from 2.9% last month.
Wall Street giants, including JPMorgan, Bank of America, UBS, Morgan Stanley, Citigroup, Deutsche Bank, Nomura, RBC, Barclays, Goldman Sachs, and TD Securities, expect inflation to ease in the coming months. However, Jamie Dimon, CEO of JPMorgan Chase, said the Federal Reserve needs to wait longer before cutting interest rates, likely after June.
Amid Wall Street estimates largely aligning with market consensus, Federal Reserve Chairman Jerome Powell is expected to forecast three interest rate cuts in 2024. CME FedWatch shows a 61% chance of Federal Reserve rate cuts in June, excluding May from the schedule. Additionally, there is a 49% chance of another 25-basis-point rate cut in September.
The US Dollar Index (DXY) is moving above 104.50 on Friday, steadily rising since the beginning of the month. Furthermore, yields on the 10-year US Treasury bonds (US10Y) have pared some gains to trade around 4.20% after the Personal Consumption Expenditure inflation report provided investors with some relief regarding inflationary pressures, bolstering bets that the Federal Reserve will soon start cutting interest rates. Bitcoin’s price typically moves inversely to the US dollar and US Treasury bond yields.
The price of Bitcoin reached $75,000 after $15 billion worth of options expired, marking the cryptocurrency market’s largest options expiry, where the leading cryptocurrency derivatives exchange Deribit settled over $15 billion in BTC and ETH options.
BlackRock mentioned that investors are “overwhelmingly focused” on Bitcoin compared to other cryptocurrencies. Bitcoin exchange-traded funds continue to see massive inflows daily, with a net inflow of $182.8 million on Thursday. Outflows from GBTC are decreasing as FTX and Genesis sell their holdings.
Senior analyst Marcus Thiel believes in an optimistic outlook for Bitcoin to rise to over $100,000 and reach $140,000 after Bitcoin’s halving. In his latest post on X, he stated that a potential 12% increase in the cryptocurrency awaits in April, based on Bitcoin’s historical performance in April.
