Bitcoin (BTC) made immediate gains at the Wall Street open on May 26 as US macroeconomic data delivered a nasty surprise.
Bitcoin shrugs off new US inflation woes
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD approaching $27,000 on Bitstamp.
The pair rose unexpectedly after daily personal consumption expenditures (PCE) data showed the first increases since October 2022.
Such a reading should represent a headwind for risk assets, including cryptocurrencies, as it means that inflation remains persistent and that further monetary tightening may be needed to tame it.
“This is a major setback in the Fed’s fight against inflation,” comments financial source The Kobeissi Letter he wrote in the answer section.
Kobeissi noted that expectations for an interest rate hike by the Federal Reserve “changed rapidly” thanks to the PCE event.
According to CME Group’s FedWatch toolthe market now narrowly favors a new hike in June, while earlier it was more than 80% sure there will be a pause.
Financial commentator Tedtalksmacro, meanwhile, acknowledged that PCE’s gains were relative.
“US PCE data came in hot, above analysts’ expectations. However, on a 3-month annualized basis, core PCE printed sharply lower… down to 4.2%,” he said he responded.
The cause for relief for traders, meanwhile, was accompanying news that the Biden administration was closing in on a deal on the debt ceiling, with the deadline now just days away.
The S&P 500 and Nasdaq Composite Index were up 1% and 1.65% 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 potential for continued growth.
Related: Bitcoin Losing Its 200-Week Trendline Puts $20,000 In Play – BTC Price Analysis
“This is the first step for Bitcoin as we retrace $26,600 and look for a continuation towards the highs of the range,” he said he commented on the price of the day event.
“If the recent correction is an aberration, we could break to $29,000 next week.”
He warned that PCE was not a “great sign” for risk assets, noting a sharp reaction to the strength of the US dollar – traditionally inversely correlated with cryptocurrencies.
The US dollar index (DXY) reached 104.4 on the day, the highest level since March 17.
“Some consolidation after this year’s rally would be healthy for the dollar,” popular trader Justin Bennett he wrote in a special forecast.
“But a daily and weekly close above 104.20 opens 105.00 early next week. The only thing that would put me bearish on the DXY is a daily close below 103.50.”
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This article does not contain investment advice or recommendations. Every investment and trading step involves risk and readers should do their own research when making decisions.
