PCE Inflation Surprise Fuels Bitcoin Surge Above $85,500

Bitcoin surged above $85,500 on Wednesday after the US Bureau of Economic Analysis reported lower-than-expected inflation figures. The August Personal Consumption Expenditures (PCE) inflation rate came in at 3.4%, below forecasts of 3.7%. Core PCE also fell to 3%, missing expectations of 3.3%.

US personal income rose 0.2% in August, with disposable income increasing 0.3%. Personal consumption expenditures increased by 0.9%, driven by stronger outlays on both goods and services.

The latest GDP data revealed a 2.2% annualized rate of expansion in the second quarter, revised up from 1.5%. Consumer spending, investment, and exports contributed to the growth, while imports rose.

Brendan Ma, head of investment strategy at the Arbitrum Foundation, noted that the revisions reinforce his view that the Federal Reserve is tightening into economic strength. He suggested that softer inflation in the September CPI could ease pressure for an October rate hike.