Bitcoin is holding up well despite unexpected inflation and falling trading volumes

Bitcoin remains strong around $107,000, despite core PCE inflation in the United States being greater than expected, implying that prices will continue to rise.   The Personal Consumption Expenditures (PCE) index, which the Federal Reserve uses to assess inflation, rose to 2.7% year on year in May, slightly higher than the 2.6% anticipated.   The increase was not significant, but it made investors more cautious and made it less likely that the Fed would cut rates immediately.

This inflation figure is consistent with what Fed Chair Jerome Powell indicated earlier this week, when he stated that additional evidence was required before altering interest rates.   The uncertainty is weighing on riskier assets such as Bitcoin, which is seeing less speculative activity.   According to Glassnode, Bitcoin’s spot trade volume has dropped significantly after peaking at $76 billion in May.  It is presently approximately $52 billion.

The futures market has a similar story.   The volume of BTC futures is declining as annual financing rates and futures spreads narrow.  This indicates that leveraged traders are losing interest.   Instead of betting on large upward swings, many investors are now using arbitrage between futures and spot prices to achieve small, low-risk profits.

Even though things have slowed down, Bitcoin’s long-term trend remains robust.   Experts suggest the support zone between $93,000 and $100,000 is critical.   As long as these base holds, Bitcoin may simply be cooling off after many individuals grabbed profits earlier this year.

Also read: Analyst Pegs S&P 500 Entry at 91 Percent If Bitcoin Stays Above $95K