Bitcoin Surges Above $66K Following Soft US Inflation Data with Positive Outlook Ahead

Bitcoin Surges Above $66K Following Soft US Inflation Data with Positive Outlook Ahead

Bitcoin has surged past $66,000, reaching its highest price in nearly two months after the release of a softer-than-expected US Core PCE inflation report for August. The report indicated that US prices rose 2.2% year-on-year, down from 2.5% in July, and below the anticipated 2.3% increase.

The month-over-month PCE price index rose by 0.1%, aligning with economists' expectations. The Core PCE price index saw a year-on-year increase of 2.7%, with the month-over-month rise of 0.1% slightly below forecasts. This modest inflation miss has led traders to price in a greater likelihood of a 50 basis point interest rate cut at the Federal Reserve's upcoming meeting in November.

According to the CME Fed Watch Tool, the chances of such a rate cut have risen to 53.4%, up from 49.3% the previous day. Expectations of monetary easing from the Fed and other major central banks, coupled with reduced recession risks, have been significant factors driving Bitcoin's price increase. Since early September, Bitcoin is up over 25%, concluding September with a 12% gain, despite September historically being a challenging month for the cryptocurrency.

Looking ahead, several factors indicate potential for further price increases in the coming quarter. Seasonal trends and expectations of a global central bank easing cycle could bolster gains. The upcoming US Presidential election may also influence market sentiment, with former President Donald Trump, a known cryptocurrency supporter, running against Vice President Kamala Harris, who has shown increasing interest in the sector.

Analysts suggest that Bitcoin typically rallies around 170 days after the halving event, with significant peaks occurring about 480 days later. While the recent price surge driven by demand for Bitcoin ETFs may differ in intensity from previous cycles, the outlook remains bullish for the end of 2024.

Bitcoin bulls are targeting key resistance levels starting at $70,000, with the potential to challenge all-time highs near $74,000. Some market participants speculate that Bitcoin could aim for the $100,000 mark soon, driven by a combination of easing inflation, favorable Federal Reserve actions, political developments, and historical trends as we approach the final quarter of the year.