Bitcoin Awaits PCE Data as Fed Rate Cut Odds Shift

All eyes are on the U.S. Bureau of Labor Statistics’ core PCE reading, the Fed’s preferred inflation measure, due for release tomorrow. According to Jake Kennis, a senior research analyst at blockchain analytics firm Nansen, the specific number is critical. “Tomorrow’s PCE print is important because it is the Fed’s inflation gauge, and crypto traders should watch for any deviation from the expected 2.7-2.9% year-over-year reading,” Kennis told Decrypt. Economists, citing estimates from the Federal Reserve Bank of Cleveland, forecast the figure to land at the higher end of that range, at 2.99%. A reading significantly above expectations could signal a more hawkish Fed policy path, fostering risk-off sentiment that typically pressures speculative assets like Bitcoin.

The immediate market reaction is tethered to these expectations. According to the CME FedWatch Tool, investors currently price in an 83.4% probability of a rate cut at the next Federal Open Market Committee (FOMC) meeting. However, this certainty has wavered slightly; the odds that the Fed will leave rates unchanged have doubled in the past week, rising from 8.1% to 16.6%. This shift underscores the market’s sensitivity to incoming data. A cooler-than-expected inflation reading, as Kennis noted, could validate the case for another rate cut, potentially providing the catalyst for Bitcoin and the broader crypto market to break out of their recent consolidation.

The recent price malaise, with Bitcoin down 5.4% weekly, has influenced sentiment on prediction markets. Data from Myriad, a prediction market owned by Decrypt’s parent company Dastan, indicates that 61% of users believe BTC will first retreat to $105,000 before it approaches its all-time high. This skepticism about an imminent run toward $125,000 is coupled with identified technical resistance. John Glover, Chief Investment Officer at Bitcoin lender Ledn, observed, “But there seems to be a lot of selling pressure between $115,000 and $119,000, so we may be seeing some people taking profits who believe we have reached the end of the bull run.”

This profit-taking has already triggered significant market movements. Glover alluded to “a clear out of weak longs” in the past week, referring to a healthy market reset where over-leveraged bullish positions were liquidated. He characterized the upcoming PCE release as a potential “non-event” unless the actual number delivers a major surprise in either direction. This perspective highlights a market that may have already priced in certain expectations, waiting for a definitive shock to dictate the next major trend.

Despite the short-term uncertainty and price pullback, a longer-term view offers a more encouraging picture. Dom Harz, co-founder of the Bitcoin DeFi project BOB, emphasized the significance of Bitcoin’s current trading level. “As we come to the end of Q3 2025, Bitcoin’s stability above $110,000 isn’t just a milestone for its price, but the crystallisation of institutional trust in the digital asset,” Harz told Decrypt. This framing suggests that the ability to hold a six-figure value, even amidst macroeconomic crosscurrents, represents a fundamental maturation for Bitcoin, moving beyond retail speculation to established asset status.

The convergence of these views paints a nuanced picture for Bitcoin. In the immediate term, the market is hostage to traditional macroeconomic forces, with the PCE data and subsequent Fed policy serving as the primary drivers. This has created a cautious environment, evidenced by prediction market data and technical selling pressure. However, the underlying narrative of institutional adoption and trust provides a solid foundation. The outcome of tomorrow’s data release will likely determine whether Bitcoin resumes its upward trajectory after a healthy correction or faces a more prolonged period of consolidation as it digests a potentially more hawkish monetary policy outlook from the Federal Reserve.