Tom Lee Says PCE Revision Could Show Fed Hiked Too Early, Crypto to Benefit

Financial analyst Tom Lee believes a forthcoming revision to the Personal Consumption Expenditures (PCE) inflation index may indicate that the Federal Reserve raised interest rates too soon. The revision, set to be released on September 30, could lower core inflation readings by 0.2 to 0.4 percentage points, according to Lee.

This could mean that the Fed's decision to raise interest rates to 3.75-4.00% may have been premature, and that policymakers may be inclined to 'walk back' their hawkish stance. Lee argues that this shift towards more neutral policy would be bullish for cryptocurrency, as it would signal a decrease in the Fed's restrictive monetary policy.

Lee claims that the components driving the gap in inflation data do not affect most households, with one notable exception being the price of flash memory. He notes that the average person's only significant expense related to memory is the phone they carry in their pocket.

The market's response to the Fed's rate hike has been mixed, with Bitcoin's price trading near $77,000 in the days leading up to the decision, and spot Bitcoin ETFs seeing significant redemptions. However, flows have turned positive since, with nearly $1 billion invested in Bitcoin on Monday and over $714 million on Tuesday.