Bitcoin (BTC) made snap gains at the May 26 Wall Street open as United States macroeconomic data delivered a dismal surprise.
Bitcoin ignores recent US inflation problems
Data from Cointelegraph Markets Pro and TradingView shows BTC/USD near $27,000 on Bitstamp.
The pair rose unexpectedly after Personal Consumption Expenditures (PCE) data showed its first increase since October 2022.
Such a reading should indicate a headwind for risky assets, including crypto, because it means that inflation remains constant and that further financial tightening may be needed to break it.
“This is a major failure in the Fed’s fight against inflation,” financial commentary resource The Kobeissi Letter WRITES in the answer part.
Kobeissi noted that expectations for an interest rate hike from the Federal Reserve are “quickly shifting” thanks to PCE activity.
According to the CME Group’s FedWatch Tool, the market is now slightly in favor of a new hike in June, while previously, more than 80% were certain that there would be a stop.
Financial commentator Tedtalksmacro, meanwhile, acknowledged that PCE gains are relative.
“US PCE data comes in hot, above analyst expectations. On a 3-month annualized basis, however, core PCE printed lower… to 4.2%,” he React.
The cause for relief for traders, on the other hand, comes from the accompanying news that the Biden administration is close to negotiating the debt ceiling, with the deadline now just a few days away.
The S&P 500 and Nasdaq Composite Index rose 1% and 1.65%, respectively, at the time of writing.
DXY hits 10-week high
Turning to Bitcoin itself, Michaël van de Poppe, founder and CEO of trading firm Eight, flagged the potential for upside continuation.
Related: Bitcoin’s loss of its 200-week trendline puts $20K in play – BTC price analysis
“That’s the first step for Bitcoin, as we retrace $26,600 and look for a continuation towards the upper range,” he commented in the day’s price action.
“If the recent correction is the deviation, we could break through $29,000 next week.”
He warned that the PCE was “not a good sign” for risky assets, noting the knee-jerk reaction for the strength of the United States dollar – traditionally the opposite of crypto.
The US Dollar Index (DXY) hit 104.4 on the day, the highest level since March 17.
“Some consolidation after this month’s rally would be healthy for the dollar,” wrote popular trader Justin Bennett in a dedicated forecast.
“But a daily and weekly close above 104.20 will open 105.00 early next week. The only thing that would make me bearish on DXY is a daily close below 103.50.
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This article does not constitute investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.