Bitcoin Jumps on Cool PCE Inflation Data as Bond Yields Hit 20-Year Highs

The U.S. personal consumption expenditures index for August came in cooler than economists expected, with headline PCE rising 3.4% year over year (0.3% month-over-month) versus forecasts of 3.7% and 0.4%. Core PCE, which excludes volatile food and energy costs, increased 3.0% annually and 0.2% for the month, missing consensus projections of 3.3% and 0.3%.

Those softer inflation prints altered the market's view on imminent Fed tightening. CME's FedWatch tool now prices a roughly 62% probability that the Federal Reserve will hold rates in October and about a 37% chance of a 25-basis-point hike. Lower expected policy tightening generally supports risk assets by reducing the appeal of cash and government securities.

Bitcoin reacted to the data by rallying into the mid-$85,000s before settling back; its intraday high was $85,598.94 and it traded around $84,376.09 after the pullback, a 0.9% gain for the session. The broader crypto market capitalization rose modestly, remaining just under $3 trillion. On-deck sentiment indicators from a prediction market run by Decrypt's parent company show traders assign only a 7% chance that Bitcoin will surpass its $126,199 all-time high before 2027, while near-term contracts price about a 49% chance BTC stays above $84,000.

The macro backdrop remains mixed. The 10-year U.S. Treasury yield climbed to roughly 5.25%, its highest level since 2002, even as equity indices slipped (S&P 500 -0.2%, Dow -0.3%, Nasdaq -0.1%). Other data points include Brent crude around $96.16 after briefly topping $100, consumer confidence at a 12-year low, and August job openings of 7.08 million, which undershot forecasts.

Technically, Bitcoin's trend indicators remain bullish but show signs of consolidation. The ADX is elevated, reflecting the strength of the recent move, while the 50-day EMA sits above the 200-day EMA — a commonly viewed bullish arrangement — and price trades roughly 8% above the 50-day average. Momentum measures like the RSI are favorable but not overbought, leaving room for further upside, though traders note resistance around $85,599 and the prior swing high of $87,354 as levels to clear for a confirmed breakout.