Bitcoin Price Reclaims $28,000 As Core PCE Comes Cooler Than Expected
Today, March 31, is of utmost importance for the Bitcoin price for three reasons: the Bitcoin Options quarterly settlement day, the release of the US Personal Consumption Expenditure (PCE) price index, and the closing candle of BTC, which could herald a breakout from the bearish cycle.
The first has already happened. At 8:00 am UTC (4:00 am EST), Deribit, the world’s largest crypto options exchange by trading volume and open interest, liquidated over $4 billion worth of Bitcoin options. Bitcoin price dropped below $28,000 on this occasion, posting a low of $27,512.
The pseudonymous analyst @52kskew claimed that a sale driven by Deribit has occurred. However, decent supply support has been seen on Bitstamp and several other exchanges. The analyst shared the chart below and added:
Deribit CVD & Delta showing the impact on option expiry price. Typically occurs when open interest on large options is near expiration and the books need to be balanced (delta neutral or covered).
Bitcoin price crosses $28,000 based on key PCE data
As Bitcoinist reported earlier this week, the PCE released today at 8:30 am EST was the most important macro data point of the week. The PCE is the Federal Reserve’s preferred inflation metric. This second major event is now also in the books.
In an initial reaction, Bitcoin and crypto markets reacted positively to the new inflation data. The US Bureau of Economic Analysis (BEA) announced that the annual rate of the core PCE price index was 4.6% in February, while the expectation, as well as the previous reading, was 4.7%.
Core PCE services excluding housing saw their smallest increase in February since last July. The monthly Core PCE rate was reported at 0.3%, with the forecast at 0.4% and the latest reported at 0.6%.
Additionally, February US Personal Spending (MoM) was also reported at 0.2% (0.3% estimate, up from 2.0%). Additionally, the US PCE Price Index for February (YoY) came out at 5.0% (5.1% estimate, 5.3% prior report).
US February Core PCE Price Index (MoM): 0.3%, [Est. 0.4%, Prev. 0.5%]
US February Core PCE Price Index (YoY): 4.6%, [Est. 4.7%, Prev. 4.7%]
February US Personal Spending (MoM): 0.2%, [Est. 0.3%, Prev. 2.0%]
US February PCE Price Index (YoY): 5.0%, [Est. 5.1%, Prev. 5.3%]
— Fio CN (@Sino_Market) March 31, 2023
In principle, any slowdown in inflation is a positive sign and suggests that the Federal Reserve’s aggressive tightening of monetary policy last year is having at least a moderate effect. Because of this, Bitcoin price is also reacting bullish to the news.
However, the reaction is muted. While inflation is slowing down, which is good for financial markets, the economy is also slowing down, as shown by personal spending, which is bad and fuels fears of a recession.
Furthermore, the deceleration of inflation cannot be considered good enough. PCE of 5% and core inflation of 4.6% are still far from a stable 2%. Nick Timiraos of the Wall Street Journal wrote via Twitter that core PCE inflation in February was +4.6% over the last 12 months, +4.9% over the last 3 months and +4.5% over the last 6 months, annualized – showing slow progress.
Core PCE inflation in February
+4.6% in the last 12 months
+4.9% in the last 3 months, annualized
+4.5% in the last 6 months, annualized pic.twitter.com/YdokzmQI0B
— Nick Timiraos (@NickTimiraos) March 31, 2023
Key Monthly Close of BTC Price Targets
Bitcoin traders should also pay attention to the monthly close of the candlestick on the Bitcoin chart. As Rekt Capital notes, BTC could break its multi-year downtrend and enter bullish territory again.
#BTC is just two days away from confirming a breakout of the macro downtrend
Historically, this has been a trend-setting breakout.
Now, we are witnessing history being made$ BTC #Crypto #Bitcoin pic.twitter.com/a8OXaS2jrk
— Rekt Capital (@rektcapital) March 30, 2023
At press time, Bitcoin price was trading at $28,172, trying to break above the resistance at $28,150.
iStock Featured Image, chart by TradingView.com