The Federal Reserve's preferred inflation gauge, core PCE, is expected to show a rise in September, moving away from the Fed's 2% target. According to FactSet, it likely increased by 2.9% year-on-year, marking 55 consecutive months above the target. This sticky inflation could bolster Fed hawks advocating for slower rate cuts.
Despite this, volatility indices indicate no major turbulence. Volmex's annualized one-day bitcoin implied volatility index (BVIV) hovers around 36%, suggesting a 24-hour expected price swing of 1.88%, which is within normal ranges. Low volatility expectations are likely due to anticipated Fed rate cuts next week, with CME's FedWatch tool pricing a 25 basis point cut on Dec. 10 as a done deal.

A softer-than-expected inflation report could push the 10-year Treasury yield below 4%, potentially helping Bitcoin break out of its current trading range of $92,000-$94,000. Iliya Kalchev, a Nexo Dispatch analyst, noted that a softer labor read and contained PCE would reinforce the easing narrative, supporting crypto's rebound, while any upside surprise might keep markets range-bound until the Fed clarifies its path.
However, analysts at ING have warned that any decline in the benchmark yield could be short-lived.
The data could similarly impact alternative cryptocurrencies. Ether's one-day implied volatility index is at 57.23%, implying a 3% price swing, slightly higher than Bitcoin. Solana's volatility index signals a 3.86% move, with XRP at 4.3%.




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