Crypto traders are on edge ahead of the December Personal Consumption Expenditures (PCE) report — the Federal Reserve’s preferred inflation gauge — which could dictate near-term direction for risk assets.
According to Nick Timiraos of The Wall Street Journal, forecasters expect:
- Headline PCE: +0.37% month-over-month (≈4.5% annualized), lifting YoY to 2.9% (highest since March 2024)
- Core PCE: +0.37% month-over-month, pushing YoY to 3.0% (highest since February 2025)
That compares with November’s softer 0.21% headline and 0.16% core increases.
Why this matters for crypto
The PCE report heavily influences expectations around Federal Reserve policy:
- Hotter-than-expected print → Higher-for-longer rate expectations → Rising Treasury yields & stronger dollar → Typically bearish for crypto
- Cooler-than-expected print → Revived rate-cut bets → Risk-on sentiment → Potential crypto rally
Digital assets have been tightly correlated with shifts in rate expectations, especially via moves in the U.S. 10-year yield and dollar index.
Bitcoin technical setup ahead of the print
Bitcoin is trading around $67,852, up 1.27% on the day, consolidating just below the key $70,000 psychological resistance.
Key indicators:
- RSI: 36.86 (recovering from oversold but still weak momentum)
- Balance of Power: Negative, suggesting sellers retain a slight edge
Scenario watch:
- Hot PCE: BTC could revisit mid-$60,000 support
- Soft PCE: Renewed attempt at breaking $70,000
BTC/ETH ratio signals defensive positioning
The BTC/ETH ratio currently stands at 34.58, reflecting strong Bitcoin outperformance over Ethereum.
The surge from below 30 in late January to above 34 suggests investors have rotated toward Bitcoin during recent volatility — a classic defensive move.
- If inflation surprises to the upside → Bitcoin dominance may extend further.
- If inflation cools → Capital could rotate back into Ethereum and higher-beta altcoins.
Bigger picture
With core PCE potentially climbing to 3.0% year-over-year — its highest level in nearly a year — today’s print could materially shift expectations for the Fed’s next move and shape crypto market direction into March.
For now, Bitcoin remains compressed below resistance. The PCE release may determine whether it breaks higher — or rolls back into support.
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