Benjamin Cowen, a well-known crypto analyst, has weighed in on the recent US inflation figures and the Federal Reserve’s latest policy stance to gauge their effect on Bitcoin's price movement. The June PCE Price Index dropped by 0.1% month-over-month while the core PCE barely rose 0.1% year-over-year, signaling a modest inflation pace that markets greeted with optimism.
Amidst these numbers, the US economy posted 1.5% annual GDP growth and unemployment claims remained low at 197,000 weekly, showing the economy's underlying strength. Bitcoin’s price reflected this cautious optimism by holding firm, steering clear of steep falls traders often expect after such reports.
Fed decision hints at more tightening ahead despite stability
However, Cowen pointed out a key detail missed by many: although the Fed left rates unchanged, three members of the Federal Open Market Committee voted for a hike. This reveals fractures within the Fed and suggests further tightening isn’t off the table. Cowen highlighted the unusual dynamic where 2-year Treasury yields have climbed above the Fed’s benchmark rate, which tends to soften monetary policy's grip on markets.
plus with the labor market showing signs of resilience, inflation pressures might resurge. Cowen raised the possibility of a surprise rate increase later this year, possibly in September, which could shock investors expecting rate cuts. Such a move risks accelerating capital flight from risky assets like Bitcoin.
Outlook on Bitcoin’s bottom
Looking at Bitcoin’s historical price cycles, Cowen suggested the crypto has yet to test its true low this year. His forecast points to the fourth quarter as the probable timeframe for Bitcoin’s bottom, implying that market participants should brace for more volatility before a sustainable rally.
This is not financial advice.
