On the Eve of the Fed Rate Cut: How Will PCE Data Impact the Cryptocurrency Market?

On Friday evening Beijing time, the US will release the September Personal Consumption Expenditures Price Index (PCE), the last key inflation indicator the Federal Reserve will focus on before deciding whether to cut interest rates. The market is extremely sensitive to this data release—according to the Chicago Mercantile Exchange, the probability that the Fed will cut interest rates by 25 basis points next Wednesday is as high as 87%.

As the data was released, the crypto market quickly reacted. Bitcoin briefly fell to $89,326 after the data release but then quickly rebounded above $91,000, rising about 1.86% on the day.

01 Contradictory Signals at the Economic Crossroads

The US economy currently presents a contradictory picture. On one hand, the ADP private sector employment report and consumer confidence surveys indicate rising recession risks, with hiring slowing and more job seekers.

On the other hand, the consumption sector has shown unexpected resilience. During the recent Black Friday, consumers spent billions of dollars both online and offline.

This data divergence makes the PCE report and the latest personal spending and income data released on December 8 “extremely important.” Investors hope this report can verify economic sentiment with hard data or reveal discrepancies between market perception and actual conditions.

02 Cooling Inflation and Policy Shifts

The market’s focus is on whether inflation data will be as mild as expected. According to economists surveyed by the Wall Street Journal, overall PCE for September is expected to rise 0.3% month-on-month, with core PCE rising 0.2%. Year-on-year, overall PCE is expected to remain at 2.9%, and core inflation may increase 2.8% year-on-year.

In fact, the just-released US September core PCE price index annual rate unexpectedly fell to 2.8%, hitting a three-month low.

Jack Janasiewicz, Portfolio Strategy Director at BNP Paribas Wealth Management, said policymakers may “ignore” lagging inflation data, as overreliance on such data could lead to slow action. He added that the risks posed by an economic slowdown, particularly a rapid rise in unemployment, could outweigh those of accelerating inflation.

03 Crypto Market Reaction to the Macro Environment

Before the PCE data release, the cryptocurrency market had already begun reacting positively to the possibility of a rate cut. Bitcoin briefly broke through $91,114 on the morning of December 8, up 1.86% from the previous trading day.

This crypto rally is not an isolated phenomenon. During the same period, spot silver historically rose above $59, setting a record high for the second consecutive day. The Dow Jones Industrial Average also rose 104.05 points, closing at 47,954.99.

Market analysis shows that cryptocurrencies have become an important indicator of global liquidity changes. With expectations of a possible shift to loose monetary policy by the Fed, investors are reallocating assets, seeking hedges beyond traditional stocks and bonds.

04 Major Cryptocurrency Price Movements

The following are the prices of major cryptocurrencies on the Gate exchange as of December 8:

Although Ethereum’s latest price on Gate is $4,478.98, it fell 4.21% in 24 hours. Meanwhile, Bitcoin showed relative strength, reflecting the market’s tendency to seek core assets amid uncertainty.

05 Fed Policy Path and Market Expectations

With the intertwining shadow of “stagflation” and the possibility of “precautionary rate cuts,” there is a strong market consensus on the Fed’s next move. BNP Paribas Wealth Management’s Janasiewicz noted that inflation will remain “somewhat sticky,” but will not see significant swings.

According to a Bloomberg survey, economists expect the Fed to cut rates two more times starting in March next year. This means that even if rates are cut at this meeting, the easing cycle may just be beginning.

US Treasury Secretary Janet Yellen stated that US GDP growth will reach 3% this year, and inflation is expected to drop significantly next year. This statement further strengthened market expectations of a policy shift.

06 Gate Platform Trading Strategy Recommendations

Facing the upcoming Fed decision window, Gate exchange traders may consider several strategies to cope with market volatility.

First, focus on high-liquidity blue-chip crypto assets. Bitcoin generally shows greater resilience during macro policy inflection points, and data shows it has rebounded from an early low of $89,326 to above $91,000.

Second, use derivative tools provided by the Gate platform for risk management. Short-term traders can consider setting tight stop-loss orders to guard against sharp volatility after data releases.

As a leading global trading platform, Gate supports trading of over 1,400 cryptocurrencies, offering investors a wide range of asset allocation choices. The platform handles over $4.5 billion in daily trading volume and achieved a 24% user growth rate in Q3 2025.

In terms of regulatory compliance, Gate has expanded compliance layouts in 15 additional jurisdictions and implemented security upgrades in 2025, resulting in a 78% year-on-year decrease in platform security incidents compared to 2024.

Outlook

Expectations of a Fed policy shift are already deeply embedded in the market, with the 10-year US Treasury yield rising to its highest level in weeks. Bitcoin’s rebound to the $91,000 level clearly reflects the market’s early pricing of an easing cycle.

The US dollar index’s movement reflects this change in expectations. On Friday, the dollar fluctuated around 98.95, after hitting a near five-week low of 98.77 in the previous session. With the dual factors of “stagflation” and the possibility of “precautionary rate cuts,” the dollar may bid farewell to its one-sided trend and enter a new phase of high volatility and range-bound fluctuations.

The real test for the market lies in whether, after the data is released, investors can turn short-term optimism into firm confidence in the long-term value of crypto assets.