The crypto market is bracing for Friday’s Personal Consumption Expenditures (PCE) inflation report, which could decide whether the Federal Reserve cuts rates in October or keeps them elevated for longer. With Bitcoin, Ethereum, and XRP all showing weakness on the daily charts, traders are watching this macroeconomic catalyst as a potential turning point.
Crypto Market: Why the Inflation Report Matters?
The Fed has been signaling a shift towards supporting the labor market after its first rate cut this year. However, inflation remains stubbornly above the 2% target the Fed aims for. Core PCE is expected at 2.9% year-on-year for August, remaining unchanged from July, while headline inflation is forecasted to rise slightly from 2.6% to 2.7%. If the reading exceeds expectations, it may lead the Fed to pause rate cuts, reinforcing a higher-rate environment that tends to pressure risk assets, including cryptocurrencies.
For crypto traders, this potential outcome implies higher short-term borrowing costs, decreased liquidity, and a continued preference for yield-bearing assets like Treasuries over more volatile markets. Conversely, if the inflation numbers come in softer, it could revitalize optimistic market sentiment, driving expectations for aggressive Fed easing by the end of the year.
Crypto Market: Bitcoin Daily Chart Analysis
Bitcoin (BTC) has recently pulled back to around $109,300 after struggling to maintain levels above $112,000. The Heikin Ashi candles indicate a series of consecutive red bars, underscoring persistent selling pressure. The Bollinger Bands are widening, and BTC is now testing the lower band near $109,600, suggesting potential volatility to the downside.
Key levels to monitor:
- Support: $107,500 (S1 pivot), followed by $104,000 (S2 pivot).
- Resistance: $112,000 short-term, then $116,000 if momentum shifts.
A hotter-than-expected PCE reading could push BTC below $107,500, while a cooler inflation print might allow it to reclaim $112,000 and potentially retest the $116,000 level quickly.
Crypto Market: Ethereum Daily Chart Analysis
Ethereum (ETH) is trading just below $3,920, having dropped underneath its 20-day moving average. Similar to BTC, ETH’s Heikin Ashi candles remain bearish, hovering just above critical support at $3,800. The Bollinger Bands are also beginning to fan out, indicating the possibility of increased volatility.
Key levels to look for:
- Support: $3,800 (a crucial psychological and technical threshold), followed by $3,400.
- Resistance: $4,100, then potentially $4,400.
If inflation surprises on the upside, ETH risks slipping to the $3,400 region. Conversely, a softer PCE figure could facilitate a rebound, allowing ETH to reclaim $4,100 and possibly aim for $4,400 resistance.
Crypto Market: XRP Daily Chart Analysis
XRP is experiencing significant pressure, trading around $2.75 and witnessing nearly a 3% decline for the day. Its chart structure indicates a series of lower highs since mid-September, putting it at a key support zone between $2.70 and $2.60. A breach of this support level could precipitate a sharp decline toward $2.40.
Key levels to monitor:
- Support: $2.70–2.60, then $2.40.
- Resistance: $2.95, followed by $3.10.
XRP’s heightened volatility indicates a higher beta relative to BTC and ETH. Traders may react more severely to any hawkish surprises in the upcoming inflation data.
Total Crypto Market Cap Outlook
The entire crypto market cap has slipped to $3.69 trillion, retreating from recent highs. The daily chart shows a series of red Heikin Ashi candles and expansion in the lower Bollinger Band, indicating widespread weakness across the market. Support holds at $3.60 trillion, with further risk heading towards $3.40 trillion if selling persists.
This trend underscores the fact that the market is aligning more closely with macroeconomic conditions rather than specific altcoin or sector strengths.
What Comes Next?
If Friday’s PCE comes in above expectations: BTC is likely to break below $107,500, ETH could test $3,400, and XRP risks sliding toward $2.40. The overall market cap may dip below $3.60 trillion.
Conversely, if PCE is softer than forecast: BTC could rebound to $116,000, ETH may retake $4,400, and XRP could aim for $3.10. Subsequently, the market cap could surge above $3.90 trillion.
At this juncture, the charts exhibit bearish tendencies, but the upcoming PCE report will serve as a critical catalyst, shaping the market’s trajectory for the fourth quarter.