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Bitcoin gains as rate hike expectations ease after soft PCE data
Cooler inflation numbers and dovish Fed commentary pushed Bitcoin briefly above $85,598 as odds of an October hike fell sharply
Bitcoin got a macro-flavored lift on September 30, briefly touching $85,598 as traders sharply reduced their bets on another Federal Reserve rate hike in October.
What moved the market
The main trigger was August’s Personal Consumption Expenditures data, the Fed’s preferred inflation gauge. Core PCE, which strips out volatile food and energy prices, rose 3.0% year-over-year. Forecasters had expected 3.3%.
Headline PCE came in at 3.4%, against predictions of 3.7%.
The data landed on top of comments from NY Fed President John Williams on September 29. He said there was “no need for urgency” on future rate increases.
Put together, the two signals caused a sharp repricing. Odds of a Fed hike fell from above 70% to around 37% on September 30.
A September that broke the pattern
Bitcoin had spent much of the month trading between $83,000 and $84,000.
Bitcoin closed September with a 7% gain. This marks its first positive September following a positive August since 2013.
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Bitcoin’s third-quarter return exceeded 40%.
That gain came despite Treasury yields sitting above 5.2%, which gives investors a meaningful return for simply holding government debt.
The ETF bid keeps showing up
Spot Bitcoin ETFs continued to see inflows, including a $2.8 billion surge in a single reported week.
Grayscale’s Zach Pandl described the Fed’s September hike as a “mid-cycle adjustment” rather than the start of an aggressive tightening campaign, suggesting ongoing capital allocation toward Bitcoin is unlikely to be seriously disrupted. His read echoes market behavior seen in the late 1990s, when policy tweaks did not derail broader risk appetite.
What this means for investors
The clearest takeaway is how tightly Bitcoin now trades on macro data. A PCE release and a Fed speech moved the price more than any crypto-specific headline did this week.
Hike odds around 37% are lower, but they are not zero. A hot jobs report or an inflation surprise in the other direction could push those odds back up quickly.
With Treasuries paying above 5.2%, continued ETF inflows under those conditions would support the argument that institutional demand is structural, not just opportunistic. A slowdown in those flows would be an early warning sign.