A ceasefire has been achieved and discussions on tariffs continue. Tensions with China have ended, and now the time has come. Cryptocurrency enthusiasts eagerly expect the Federal Reserve must declare, “We are reducing interest rates.” A sudden spike in inflation should be avoided, and Friday’s data will serve as a crucial indicator.
Anticipating June 27 and Its Impact on Cryptocurrencies
The Personal Consumption Expenditures (PCE) data from the U.S., due on Friday, holds immense importance as it’s monitored closely by the Fed. With tariffs introduced in April raising product prices across several sectors starting at a base of 10%, companies are exhausting their inventories, leading prices to rise. Therefore, observing the impact of tariffs on inflation in the coming Friday will be pivotal.
In the past six days, three Fed members pointed towards a rate cut in July, with two suggesting a reduction if inflation doesn’t rise. However, Waller, the first member to demand a reduction, revealed that there’s been a substantial regression in job creation last Friday, indicating an urgent need to lower rates.
For June 27’s PCE data, an annual expectation of 2.3% exists, while the previous data stood at 2.1%. The Fed’s target is 2%, making a 0.2 percentage point increase tolerable given the previous low readings. However, any higher rise may urge Fed members to wait until September. In an optimal scenario, the data would fall at 2.1% or lower, resulting in a valuation reflection within cryptocurrencies as rate cuts price in. Expectation for core PCE stands at 2.6%, up from the previous 2.5%.
Will Cryptocurrencies Rise?
Despite recent rallies, funding rates remain low, suggesting potential support for further increases on the futures side. Thus, while stock market indicators hint exhaustion, cryptocurrencies could experience further elevations.
DaanCrypto shared the TOTAL chart displaying the collective market cap of cryptocurrencies, noting that the bounce from the support point is promising.
“The Crypto Market Cap bounced at a crucial level and has been rising since. This indicates a positive overall bullish momentum. Should it drop below this level, caution is advised over a potential larger consolidation or drop in the summer. A level to closely monitor, roughly around $100,000 for BTC.”
