Source: Jin10 Data
Author: Zhu Yu
Analysts believe that investors' interest in bitcoin and ethereum has declined, and a price drop could trigger a widespread liquidation in the cryptocurrency market.
According to estimates by US economists, the Personal Consumption Expenditures (PCE) indicator, which is preferred by the Federal Reserve to measure inflation, is expected to be slightly higher than expected. This may prompt the Federal Open Market Committee (FOMC) of the Federal Reserve to reconsider the possibility of cutting interest rates in September. If PCE inflation data exceeds expectations, Bitcoin and Ethereum prices will also face greater selling pressure.
Economists estimate that PCE inflation is 2.6% and core PCE is 2.7%.
The US Bureau of Economic Analysis will release US PCE inflation data for July on Friday, August 30th. Economists estimate that the annualized PCE rate will reach 2.6%, higher than last month's 2.5%. In addition, the monthly PCE rate is expected to be 0.2%, compared to 0.1% last month.
Economists predict that the core PCE inflation rate, excluding food and energy prices, will increase by 0.18% on a monthly basis and 2.7% on an annual basis. These estimates are slightly higher than the June PCE numbers, but the market generally believes that inflation will continue to decline.
José Torres, senior economist at Interactive Brokers, said in an interview with Morningstar, "We will see inflation continue to make progress." He attributed this to the decline in commodity prices, crude oil, and gasoline prices. However, the rise in crude oil, natural gas, and gold prices today has made traders cautious.
If PCE inflation data exceeds expectations, Bitcoin and Ethereum prices may fall, triggering a widespread liquidation in the cryptocurrency market.
The European Central Bank is considering another interest rate cut on September 12th, which will provide traders with more information before the Fed's planned rate cut on September 18th. ECB policymakers have hinted at a high possibility of rate cuts, and the market is closely watching inflation data in France, Italy, and the eurozone as a whole this Friday.
According to the latest signal from Fed Chairman Powell, the Fed is expected to cut interest rates three times this year, possibly as early as September. However, if PCE inflation and employment data exceed expectations, the Fed may postpone the rate cut until November.
At the same time, the stock and crypto markets have become more volatile as traders track Nvidia's financial report and PCE inflation data. Despite Nvidia's revenue and earnings exceeding expectations, the sales outlook for this quarter did not satisfy investors. Nvidia's stock price fell by about 8% in after-hours trading on Wednesday.
The CME Group's FedWatch Tool shows a 65.5% probability of a 25-basis-point rate cut in September, and still indicates a total of 100 basis points of rate cuts for the year.
Bitcoin rebounded slightly yesterday, with a 23% decrease in trading volume over the past 24 hours, indicating a decrease in trader interest. Meanwhile, Ethereum's trading volume decreased by 25% in the past 24 hours. On the daily chart, the price of Ethereum is currently facing strong resistance.
An indicator called NVT Golden Cross by CryptoQuant shows that Bitcoin is trying to surpass its previous peak. This indicates that the current uptrend is losing momentum. The NVT Golden Cross needs the support of a bull market to surpass the previous peak and resume the upward trend.
In addition, bitcoin options worth $3.65 billion and ethereum options worth $1.35 billion are set to expire on the largest derivatives exchange Deribit. This could further trigger the liquidation of long positions in bitcoin and ethereum, leading to a market adjustment at the time of the release of US PCE inflation data.
Editor/rice