🌎 Cryptos Surge as US Inflation Data Boosts Market Sentiment

Cryptocurrencies, stocks, and other risky assets received a boost on Friday, Sept. 27, after the U.S. government published encouraging inflation data.

US PCE Inflation Drops in August

Bitcoin held steady above $65,000, while altcoins like Wormhole, Floki, Pepe, and Shiba Inu saw significant gains, jumping by over 15%. Futures tied to the Dow Jones, S&P 500, and Nasdaq 100 rose by over 25 basis points.

Data from the statistics agency showed that personal consumption expenditure (PCE) dropped from 0.2% in July to 0.1% in August, lower than the expected 0.2%. Year-over-year, it fell from 2.5% to 2.2%, marking the lowest point in over two years.

Core PCE, which excludes volatile food and energy prices, also fell from 0.2% to 0.1% during the month. These numbers suggest that the Federal Reserve is nearing its inflation target of 2.0%. As a result, the bank will likely continue cutting interest rates in the final two meetings of the year, as the unemployment rate remains above 4%. The Fed had already reduced rates by 0.50% in its last meeting.

Other global central banks, including the Swiss National Bank, European Central Bank, and the Bank of England, have also adopted a dovish tone. Historically, cryptocurrencies like Bitcoin, Ethereum, and Shiba Inu have performed well when the Fed is cutting interest rates.

China’s Economic Measures

China, the world’s second-largest economy, has taken significant steps to stabilize its financial markets. On Tuesday, the central bank reduced a key interest rate and lowered reserve ratios, a move that will unlock over $100 billion to stabilize the stock market. Beijing is also considering delivering over $150 billion in additional stimulus.

Changpeng Zhao’s Release and Market Sentiment

Bitcoin, Wormhole, and Pepe also rose as crypto investors awaited Changpeng Zhao’s release from custody. Zhao, Binance’s founder, had been serving a four-month prison sentence as part of his settlement with the U.S. government. In addition to his sentence, Zhao was fined $50 million and relinquished his role as Binance’s CEO. Binance was ordered to pay $4.3 billion in penalties.

Analysts believe that CZ’s release will lead to more crypto upside. In an X post, Ki Young Ju, the CEO of CryptoQuant, predicted that crypto would “skyrocket” when he is released. Another analyst, Adrian Zdunczyk, with over 600k followers on X, predicted that traders will start boosting cryptocurrencies after his release.

Zhao’s release came at a time when sentiment in the crypto market had improved, with Bitcoin entering a technical bull market.