A less severe inflation report could push the 10-year U.S. Treasury bond yield below 4% and support the recovery of cryptocurrencies.
Major currencies are awaiting the release of the core personal consumption expenditures price index (Core PCE) data on Friday, which is the preferred inflation measure of the Federal Reserve.
#### Key points:
- The core PCE index is expected to rise to 2.9% annually in September, surpassing the Fed's target of 2% for the 55th consecutive month.
- Despite concerns about persistent sticky inflation, volatility indicators remain calm and do not indicate major disruptions.
- A less severe report than expected could push the 10-year U.S. bond yield below 4%, aiding the recovery of cryptocurrencies.
So far, the market does not seem to expect dramatic surprises. The one-day implied Bitcoin volatility (BVIV) from Volmex is hovering around just 36%, indicating that the market expects a price move of ±1.88% over the next 24 hours (about ±1,730–1,770 dollars if the price is around $93,000).
Bitcoin is currently confined to a very tight range between $92,000 and $94,000 for the past two days. A potentially weaker-than-expected Allen inflation report may be enough to break this range upwards, especially since the CME FedWatch tool prices a 25 basis point rate cut on December 10 at nearly 100%.
Elia Kalchev, Nexo Dispatch analyst, said:
A weaker-than-expected jobs and PCE report will bolster the narrative of monetary easing and support the recovery of cryptocurrencies, while any upside surprise in inflation could keep markets range-bound until the Fed clarifies its path.
#### Expected volatility of other currencies over the next 24 hours (according to implied volatility indicators):
- Ethereum (ETH): 57.23% → Expected move ±3%
- Solana (SOL): → Expected move ±3.86%
- Ripple (XRP): 4.3% → The largest relative move in the group (±4.3%)
In short: volatility is relatively low and the market is calm, but Friday's PCE data could be the spark that moves prices decisively, either strongly upwards if the inflation numbers come in weaker than expected, or staying in narrow ranges if the numbers surprise to the upside.
