Bitcoin nears $65K as US PCE inflation cools to 3.7%

Bitcoin rose toward $65,000 on Thursday after the Fed's preferred inflation gauge cooled to 3.7%, reducing expectations for a September rate hike.

"This print gives the doves some ammunition for September's meeting, but don't mistake it for a victory over the hawks," Nic Puckrin, macro analyst and founder of Coin Bureau, said.

The Personal Consumption Expenditures index rose 3.7% year over year, down from 4.1% in May and in line with the Dow Jones consensus estimate. Core PCE, which excludes food and energy, increased 0.1% month over month — below the 0.2% economists had forecast and down from 0.3% in May. On a year-over-year basis, core PCE stood at 3.3%, down from 3.4%. The data follows the Fed's decision Wednesday to hold its benchmark rate at 3.5% to 3.75% for a fifth consecutive meeting, though Dallas Fed President Lorie Logan, Cleveland Fed President Beth Hammack and Minneapolis Fed President Neel Kashkari dissented, preferring a quarter-point hike.

The cooling inflation data reduces pressure on the Fed to act at its Sept. 15-16 meeting, though renewed US-Iran hostilities could push oil prices higher and reignite price pressures. Bitcoin's ability to hold above $65,000 in the coming days will depend on whether the geopolitical backdrop allows risk assets to sustain their rally, traders said.

BTC climbed as high as $65,680 on Bitstamp during the US morning session, testing its 50-month exponential moving average as resistance. Trading volume over the past 24 hours came in above the seven-day average, CoinGecko data shows, as the market repriced rate expectations following the PCE release.

The CME Group's FedWatch Tool now shows a 79.6% cumulative probability of at least one quarter-point rate hike by or during the September meeting, down from elevated odds earlier this month when oil prices were pushing higher. The two-year Treasury yield, which closely tracks expectations for the Fed's benchmark rate, held around 4.25%.

On-chain data from CryptoQuant shows Bitcoin whale inflows to Binance have dropped 44% since June 12, while retail inflows fell 22%. Retail participants are now sending roughly twice the volume of BTC to the exchange compared with whales, a divergence that could shift sell-side dynamics depending on how each cohort reacts to the Fed's next move.

The US-Iran conflict remains a wild card. West Texas Intermediate crude oil fell to $83 per barrel early this week after a pause in hostilities, having previously traded near $95. Any escalation could push energy prices higher, complicating the Fed's inflation outlook and reintroducing headwinds for risk assets including Bitcoin.

This article is for informational purposes only and does not constitute investment advice.