Crypto Market Eyes US PCE Inflation & Fed FOMC Minutes This Week

The coming week is set to be crucial for the crypto market as several major economic updates from the United States are due. Market participants are paying attention to the upcoming April PCE inflation report and the meeting minutes from the Fed.

The expected data will likely influence market opinions due to concerns about inflation, interest rates, and continuous trade issues.

US PCE Inflation Expectations as per Wall Street Forecasts

The PCE inflation report, set to be released on May 30, is expected to guide market direction for the week. Per median forecasts compiled by Dow Jones and The Wall Street Journal, the core PCE index, which strips out food and energy costs, is expected to remain at 2.6% year-over-year. The monthly figure is forecast to show a 0.1% increase.

The headline PCE index, which includes all components, is projected to ease slightly to 2.2% from 2.3% in March. On a monthly basis, it is forecast to rise 0.1%. Personal income is expected to grow by 0.3% in April. Personal spending is seen slowing to 0.2% from the 0.7% increase in March.

Traders and analysts closely review these numbers. The Federal Reserve uses the PCE index as its preferred way to track inflation. A worse result might push the Fed to lower interest rates before the year is up.

However, any rise could encourage the Fed to stay cautious. After a decline in spending and retail sales last month, the inflation numbers are anticipated to stay around current levels.

The Cleveland Fed Nowcast model also supports expectations of a steady core reading. However, uncertainty around supply chains and geopolitical events could still influence final results. Therefore, markets may react sharply if actual data diverges from expectations.

Fed FOMC Minutes from May Are Scheduled This Week: Crypto Market Sensitivity to Tone

On May 29, the Federal Reserve will release the minutes from its May FOMC meeting. While the meeting concluded with no change to interest rates, traders will study the tone and any comments on the economic outlook.

Since that meeting, several Fed officials have repeated a cautious stance. Most noted that inflation progress has been slower than expected, making it too early to cut rates. The minutes could reveal whether some policymakers pushed for a more aggressive approach or remained in favor of holding policy steady for longer.

The yield on Treasuries has increased in recent times due to investors’ debt concerns. The approval of a large budget bill in the House, expected to increase spending by $4 trillion, has caused long-term yields to go up. Fed officials’ concerns about fiscal measures may provoke more shifts in the bond and currency markets.

Bitcoin’s Recent Performance and Macroeconomic Woes

Bitcoin has been under stress in the last few days, with its value trading at $107,592.26 after reaching a higher level earlier in the month. After President Trump announced plans to raise the tariff on EU goods to 50% and scheduled it for June 1, the stock market fell once again.

The possibility of higher tariffs caused many investors to sell off their risk holdings, including cryptocurrencies. The global uncertainty caused Bitcoin to behave more like a risky asset, dropping considerably, even though it is normally regarded as a hedge. Other digital assets, including Ethereum, fell alongside Bitcoin.

Technical analysts are monitoring important support levels. There is strong support for Bitcoin at $107,252 and $106,080. Should the levels break, the price could move towards the next target at approximately $104,145. On the bright side, there is some support near $110,282 and another at $111,877.

Despite the recent fall, Bitcoin’s fundamentals remain intact, with a market capitalization of over $2.15 trillion. However, near-term sentiment is being shaped by macroeconomic developments, including trade policy and interest rate expectations.

Institutional Interest Remains, but Risk Sentiment Is Fragile In Crypto Market

While long-term interest in the crypto market from institutions remains strong, short-term positioning may shift based on economic updates. This week’s PCE inflation report and Fed minutes may provide new clues on the timing of a potential rate cut, which would affect risk appetite.

Equity markets have already shown signs of caution. The US Dollar Index has weakened, reflecting some expectation that the Fed may eventually ease policy. However, with long-dated Treasury yields rising and debt worries increasing, volatility may persist.

A large number of trades in crypto markets prove that institutional investors are still participating. Even so, many financial funds might hold off on making moves until they analyze Friday’s data. A high inflation report might trigger a new round of selling in the digital currency space as well as in other risky investments.

If the Fed’s minutes do not appear dovish, that could put off rate decisions for a longer period. Thus, it’s possible that the current defense in markets focused on risk will continue.

Overall, the fact that investors are still interested in digital assets could sway, depending on the latest news about the economy and what the Fed communicates this week. The fate of the crypto market could be influenced by how inflation trends react with hopes for lower rates.