The US PCE data will be released. What impact will it have on the crypto market? As retail investors, what impact will it have on our transactions? What impact will it have on our daily lives?
1. Market volatility: For example, if the PCE data released today is much higher than expected, the market will worry about the Fed's interest rate hike, which may cause the price of Bitcoin to fall sharply in a short period of time. You may see the price of Bitcoin fluctuate by thousands of dollars in a day.
2. Liquidity and risk appetite: Assuming that the PCE data shows high inflationary pressure, the Federal Reserve may reduce the money in the market, which will make investors more inclined to transfer money from high-risk investments such as Bitcoin to safer assets, such as Treasury bonds. In this way, the demand for Bitcoin decreases and the price may fall.
3. Dollar value: If the PCE data is strong and the US dollar becomes stronger, for example, 1 US dollar can be exchanged for more other currencies, this is not good for assets denominated in US dollars such as Bitcoin. Because a strong dollar means that more money is needed to buy Bitcoin, which will suppress its demand and cause the price to fall.
Impact on our retail investors
1. Investment decisions: If you find that inflation is rising after the PCE data is released, you may consider reducing your investment in high-risk assets such as cryptocurrencies and investing in more stable assets such as gold or bonds. For example, you originally planned to use part of your savings to buy Bitcoin, but now you decide to buy some Treasury bonds to reduce risk.
2. Cost of living: If the PCE data shows rising inflation, such as a sharp increase in food and fuel prices, your monthly living costs will increase. Assume that your monthly food expenses increase from $300 to $350, and fuel costs increase from $100 to $120, which will affect your disposable income.
3. Loan interest rates: PCE data affects the Fed's interest rate decisions. If the data prompts the Fed to raise interest rates, your mortgage interest rate may rise from 3% to 4%. Assuming you have a $200,000 mortgage, if the interest rate rises by 1 percentage point, the monthly payment may increase by hundreds of dollars.
