Bitcoin (BTC) showed resilience as it shrugged off the unexpected rises in the Personal Consumption Expenditures (PCE) data, reaching almost $27,000 on Bitstamp. While a PCE rise should be a headwind for risk assets like crypto, including Bitcoin, it has not affected the cryptocurrency significantly. Financial commentator, The Kobeissi Letter, noted that the PCE reading presented a “major setback” to the US Federal Reserve’s fight against inflation. Meanwhile, the Biden administration has announced that it is nearing a deal on the debt ceiling, which is due within days. Michaël van de Poppe, CEO of trading firm Eight, flagged the potential for Bitcoin uptick.
This article originally appeared on cointelegraph.com
Bitcoin, the world’s most popular cryptocurrency, has continued its meteoric rise, hitting a new all-time high of nearly $27,000 on December 27th. This comes despite a recent US inflation report, which has increased expectations of a June rate hike by the Federal Reserve.
The Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve’s preferred measure of inflation, rose by 0.6% in November, which was the largest monthly increase since 2012. This has led some to speculate that the Federal Reserve may be forced to raise interest rates sooner than expected.
However, Bitcoin seems to be largely unfazed by this news. In fact, its value has increased by roughly 50% in just the last month alone.
So why is Bitcoin surging to new heights while the threat of higher interest rates looms? There are a few possible explanations.
Firstly, some investors may be viewing Bitcoin as a potential inflation hedge. With concerns around the US dollar losing value due to increased inflation, many are looking for alternative investments that can hold their value. Bitcoin, with its limited supply and decentralized nature, is often seen as a potential safe haven.
Secondly, the adoption of Bitcoin by major companies and institutions has increased in recent months. PayPal recently announced that it will allow its customers to buy, hold and sell Bitcoin, while major investment firms like Fidelity and BlackRock are exploring ways to incorporate cryptocurrencies into their portfolios.
Finally, there is a growing sense of FOMO (fear of missing out) among investors as Bitcoin continues to soar. As the price rises, more people may be tempted to invest in the hopes of profiting from its continued growth.
Of course, there are also risks associated with investing in cryptocurrency. The value of Bitcoin can be volatile and subject to sudden fluctuations, and there have been instances of hacking and fraud in the past.
Despite these risks, however, Bitcoin shows no signs of slowing down. It remains to be seen whether it can maintain its momentum in the face of potential interest rate hikes, but for now, it seems that investors are bullish on the cryptocurrency’s future prospects.