Bitcoin Drops 1.2% to $106,700 as US Inflation Surges 2.7%

Bitcoin's price fell below $107,000 following the release of the US Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) index, which showed higher-than-expected inflation on Friday. The core PCE inflation year-over-year (YoY), which excludes volatile food and energy prices, rose to 2.7%, surpassing estimates of 2.6%. Additionally, the core PCE inflation month-over-month (MoM) came in at 0.2%, above estimates of 0.1%.

The headline PCE inflation YoY in the US increased to 2.3%, in line with estimates but higher than the revised value of 2.2% from the previous month. Similarly, the PCE inflation MoM remained steady at 0.1%, matching the previous month's figure. Meanwhile, personal spending and personal income missed economists’ estimates, which could prompt Federal Reserve Chair Jerome Powell to consider rate cuts.

The CME FedWatch tool indicated a 72.1% probability for a Fed rate cut in September. The data suggested a total of 75 basis points in rate cuts by the Federal Reserve this year, assuming inflation data and market uncertainty remain stable in the coming months.

Bitcoin's price fell to around $106,700 after the release of the PCE inflation data. The 24-hour low and high were $106,460 and $107,973, respectively. Analysts, including Michael van de Poppe, remained bullish on further upside moves in Bitcoin's price. Van de Poppe pointed out that BTC could see a slight consolidation before the next breakout, adding, “I assume we’ll see a big breakout to an all-time high when we clear $108,500.”

According to the analyst's forecast, the decline in Bitcoin's price could be attributed to the higher-than-expected inflation data, which may have led traders to reassess their positions. The decrease in trading volume by 12% in the last 24 hours also indicates a decline in interest among traders. However, the overall sentiment remains bullish, with analysts predicting further upside moves in Bitcoin's price.