The recent release of the U.S. Core PCE Price Index, a key measure of inflation favored by the Federal Reserve, showed a year-over-year increase of 2.9% for August 2025, aligning with market predictions. The overall PCE index, which encompasses food and energy costs, rose by 2.7% year-over-year and 0.3% from July. This data indicates that while price pressures are receding, they remain a concern.
The timing of this report coincides with a turbulent moment for Bitcoin, which has faced significant fluctuations due to robust U.S. job data and strong GDP growth, contributing to nearly a 4% drop in its price and triggering over $1.5 billion in liquidations. Analysts are now predicting possible further declines, suggesting the cryptocurrency could revisit levels as low as $93,000, following the all-time high of $124,000 reached in August, which some believe may have marked a peak for the current market cycle.
Despite last week’s 25-basis-point interest rate cut from the Federal Reserve, which has increased speculation about additional cuts in October, sentiment remains mixed. Market participants are cautiously optimistic that the historically bullish seasonality of the fourth quarter could benefit Bitcoin in the long run. The lingering question revolves around whether easing inflation will help rebuild confidence or if existing macroeconomic and geopolitical uncertainties will solidify fears of a market peak.
Crypto research firm Bull Theory expressed optimism, interpreting the recent PCE data as a sign of potential recovery for Bitcoin and the wider crypto market. They noted that the PCE figures matched forecasts and suggested a favorable environment for risk assets. With recent tariff policies not resulting in anticipated supply-side inflation, analysts believe consumer spending continues to show resilience across key sectors, as indicated by Jennifer Lee, a senior economist at BMO Capital Markets.
According to Bull Theory, this resilience supports a softer policy stance from the Fed, even as inflation cools. Market expectations for another interest rate cut in October have increased, moving from 75.5% to approximately 81% in just a day, further bolstering confidence in risk-on assets.
While Bitcoin has faced a bearish structure given recent sell-offs, chart analysts emphasize the importance of maintaining certain support levels. For instance, Ali Martinez highlighted the need for Bitcoin to hold above the $107,200 mark; otherwise, a dip to $100,000 or even $93,000 could materialize.
From a technical standpoint, the current Bitcoin chart illustrates a bearish trend, with prices consolidating just above $109,500 after significant downward movement. Key resistance levels are identified, including $112,289 for potential upside momentum. However, any immediate rallies are viewed with skepticism, as they may encounter selling pressure until a decisive reclaim of the $113,000 mark occurs.
Overall, while the latest PCE data brings some macroeconomic relief, Bitcoin’s near-term future hinges on the ability of bulls to defend crucial support levels and navigate potential Federal Reserve easing effectively. The coming weeks will be critical for both the cryptocurrency market and broader risk assets.
