The Fed’s favored inflation measure, core PCE, is expected to have increased in September, indicating a movement away from the desired target. Nonetheless, volatility indices demonstrate stability without major disruptions.
According to FactSet, the core PCE is anticipated to rise by 2.9% year-on-year in September, straying further from the Fed’s 2% annual target. If this estimate holds, it would signify 55 consecutive months of inflation exceeding the Fed’s goal. Persistently high inflation would bolster the Fed hawks advocating for a slower pace of rate reductions.
As of this writing, Volmex’s annualized one-day Bitcoin implied volatility index, BVIV, remained at familiar levels around 36%, based on TradingView data. This corresponds to a 24-hour predicted price fluctuation of 1.88%, which is fairly standard.
Expectations of low volatility likely arise from the anticipated Fed rate cuts next week, irrespective of PCE figures. The CME’s FedWatch tool indicates a 25 basis point cut scheduled for December 10 is almost certain.
A report showing softer-than-expected results might cause the 10-year Treasury yield to dip below 4%, enabling BTC to exit its two-day trading range of $92,000-$94,000.
“A softer labor report and restrained PCE would support the easing narrative that underpin crypto’s rebound, while any unexpected positive figures may keep markets stable until the Fed’s direction is clarified,” said Iliya Kalchev, an analyst at Nexo Dispatch, in an email.
Conversely, analysts at ING caution that any reduction in the benchmark yield may prove to be temporary.
This data could similarly impact alternative cryptocurrencies.
Regarding ether, its one-day implied volatility index is 57.23%, projecting a 24-hour price variation of 3%, slightly above Bitcoin’s. Meanwhile, SOL’s volatility index indicates a price shift of 3.86%, with XRP at 4.3%.
