Bitcoin held above $78,000 on Wednesday, edging up 0.2% after the Federal Reserve's preferred inflation gauge showed prices rose 3.7% year-over-year in July, matching June's pace. The steady reading complicates the outlook for interest rates ahead of the September meeting, even as Bernstein set a long-term price target for the token.
Bitcoin was last up 0.2% to $78,739.7 on Wednesday, taking a breather after blazing past $80,000 in the previous session. The pause came as caution kicked in after fresh data showed the Federal Reserve's preferred inflation gauge held steady in July, complicating the outlook for interest rates ahead of the central bank's September meeting.
PCE inflation holds at 3.7% ahead of the Fed meeting
The PCE price index rose 0.2% from the previous month, after falling 0.1% in June, Commerce Department data showed Wednesday. From a year earlier, prices were up 3.7%, unchanged from June and slightly above economists' 3.6% forecast.
Core PCE inflation, which excludes volatile food and energy prices, also remained firm. The index increased 0.2% from June and 3.3% from a year earlier, matching both the prior annual reading and economists' expectations. The figures suggest inflation is proving slow to cool, giving Fed officials another reason to remain cautious as they weigh the path for interest rates next month.
The debasement trade meets a rate-cut risk
Bitcoin's latest rally was fuelled in large part by the so-called "debasement trade," in which markets bet that measures by the U.S. Treasury to calm a spike in bond yields would weigh on the dollar. That notion sparked flows into speculative, alternative assets like Bitcoin, crypto, and gold.
However, further signs of overheated inflation could offset the debasement trade. High inflation would push the Fed toward raising rates, a move that benefits the dollar and lowers the appeal of alternative investments.
Separately, optimism over the U.S.-Iran standoff also helped Bitcoin, after a Russian media report said the two had reached a ceasefire deal to be announced in the coming days.
Bernstein sees Bitcoin near $300K by 2029
Bernstein expects Bitcoin to reach $150,000 by mid-2027 and about $300,000 at the peak of its next cycle in 2029, helped by rising fiscal pressures and the debasement trade. The broker said higher government debt and borrowing costs could push policymakers toward policies that weaken currencies over time, increasing demand for scarce assets such as Bitcoin.
Bernstein's base case assumes Bitcoin continues to follow its historical four-year cycle. It sees the cryptocurrency at around $125,000 by the end of 2026, $150,000 by mid-2027, and roughly $300,000 in 2029.
Most altcoins lost some steam alongside Bitcoin. Ether added 2.5% to $2,501.98. XRP fell 3.1% to $1.3952.
Source: Cryptocurrency News
Trading involves risk.
Risk Disclaimer
