Bitcoin climbed back to the $65,000 level on Friday after the latest U.S. inflation data showed the Fed's preferred measure cooled to 3.7% in June, in line with forecasts. The personal consumption expenditures (PCE) price index reading offered some relief to markets that have been watching for signs the central bank can start cutting rates.
PCE matches expectations
The core PCE index, which strips out volatile food and energy prices, rose 3.7% year-over-year in June. That matched what economists had predicted. It's the latest sign that inflation is gradually easing from its peak, though it remains above the Fed's 2% target. The data gives policymakers more room to consider rate cuts later this year without stoking price pressures.
Bitcoin's bounce
Bitcoin had been trading below $65,000 in the days leading up to the release. The inflation data triggered a quick move higher, pushing the largest cryptocurrency back above that round number. The jump mirrored gains in equities and other risk assets. Traders interpreted the in-line reading as a green light for risk-on positioning, betting the Fed won't have to keep rates higher for longer.
The Fed has repeatedly said it needs to see a sustained trend of cooling inflation before it begins lowering rates. This month's PCE is one data point in that trend. The central bank's next policy meeting is in September, and markets will be watching for any shift in language. For now, Bitcoin is holding above $65,000. Whether it can stay there will depend on the next batch of economic data and the Fed's reaction.
