Bitcoin holds steady as PCE inflation cools in June

Bitcoin PCE inflation was the market’s focus Thursday after the Federal Reserve’s preferred price gauge cooled in June, giving crypto and US stocks a cleaner session after earlier pressure from semiconductor shares. Bitcoin traded around $64,500, broadly flat from the prior day, according to TradingView data cited by Cointelegraph.

The June Personal Consumption Expenditures index rose 3.7% from a year earlier, matching market expectations, according to the US Bureau of Economic Analysis. That was down from May’s 4.1% reading, which Cointelegraph reported was the highest in three years.

Risk assets also got relief as a sell-off in South Korean semiconductor stocks eased. At the time Cointelegraph reported the market moves, the S&P 500 was up 1% and the Nasdaq Composite was up 2.3%.

What does PCE inflation mean for Bitcoin?

The Personal Consumption Expenditures index, or PCE, tracks the prices consumers pay for goods and services. The Federal Reserve Bank of Cleveland says the Fed favors PCE because it covers a broad set of spending and can reflect how consumers change what they buy when prices move.

For Bitcoin investors, PCE matters because inflation data shapes expectations for Federal Reserve interest-rate policy. Higher rates can make cash and bonds more attractive relative to riskier assets, while lower or steadier rates can reduce that pressure, although Bitcoin does not move only on Fed policy.

The June report also showed the first month-over-month decline in PCE since 2020, according to Cointelegraph. Even so, several market watchers said the inflation picture remained uncomfortable because the annual rate stayed above the Fed’s 2% goal.

The Kobeissi Letter said on X that the 3.7% reading was still the second-highest since October 2024 and that US inflation was running at nearly twice the Fed’s target. Johns Hopkins economist Steve Hanke also pointed to the gap between current inflation and the 2% goal, describing inflation on X as a problem the Fed has struggled to contain.

What did the BEA report show?

The Bureau of Economic Analysis said current-dollar personal income rose in June, helped mainly by gains in compensation, income receipts from assets and government social benefits. Those increases were partly offset by a decline in farm proprietors’ income, the agency said.

The BEA also said current-dollar personal consumption expenditures increased by $65.2 billion in June. Services spending accounted for $58.2 billion of that increase, while goods spending rose by $7.0 billion.

Why are Fed rates still part of the Bitcoin story?

The Federal Reserve left interest rates unchanged at its latest meeting Wednesday. Cointelegraph reported that members of the Federal Open Market Committee showed an emerging split over the right policy path.

Matt Hougan, chief investment officer at crypto asset manager Bitwise, said on X that future rate decisions may have less effect on Bitcoin than they have in the past. He argued that Bitcoin has lived through much larger swings in rates, while the CME Group’s FedWatch Tool showed expectations for a 50-basis-point increase over the next year. A basis point is one-hundredth of a percentage point, so 50 basis points equals half a percentage point.

Hougan also said new Fed Chair Kevin Warsh is likely to use smaller rate moves similar to former Chair Alan Greenspan, rather than the approach associated with his immediate predecessor, Jerome Powell. Before Warsh’s appointment, President Donald Trump had repeatedly signaled that he expected Warsh to take a more dovish stance, according to Cointelegraph.

For now, Bitcoin’s muted response suggests traders treated the June PCE release as broadly in line with expectations. The bigger test is whether inflation keeps easing while the Fed holds rates steady or prepares its next move.

This story draws on original reporting from Cointelegraph.