The U.S. Personal Consumption Expenditures (PCE) index rose to 2.6% year-over-year in July, matching analyst expectations and sparking a fresh rebound in Bitcoin’s price. The move reinforced hopes of a Federal Reserve rate cut in September, fueling bullish sentiment across the crypto market.
According to the Bureau of Economic Analysis, July’s PCE inflation was unchanged from June’s pace of 2.6%. On a monthly basis, inflation rose 0.2%, in line with forecasts and slightly below June’s 0.3%. Core PCE, the Fed’s preferred inflation gauge, increased 0.3% month-on-month and 2.9% YoY, also consistent with expectations. 
Following the release, Bitcoin (BTC) spiked sharply above $110,000, trading around $110,700 at the time of writing. Although BTC remains down nearly 2% on the day after hitting an intraday peak of $113,400, the inflation data offered much-needed support as whales continue to take profits.
Fed Chair Jerome Powell has already hinted that a rate cut could be necessary due to weakening labor market conditions, despite lingering inflation risks. The latest PCE data adds weight to that outlook, suggesting price pressures remain under control. 
Meanwhile, CME FedWatch data shows traders continue to fully price in a 25 bps rate cut at the September FOMC meeting, with odds at 87.2%. Several policymakers, including New York Fed President John Williams and Governor Chris Waller, have signaled support for easing, with Waller even open to a larger 50 bps cut if upcoming labor data disappoints.
The combination of steady inflation and dovish Fed expectations has positioned Bitcoin and the broader crypto market for potential upside in the weeks ahead.
