U.S. PCE may rise! Will Bitcoin and Ethereum face massive liquidation?

According to estimates by American economists, the Personal Consumption Expenditures (PCE) index preferred by the Federal Reserve to measure inflation is expected to be slightly higher than expected. This may prompt the Federal Open Market Committee (FOMC) to reconsider the possibility of starting rate cuts in September. If PCE inflation data exceeds expectations, Bitcoin and Ethereum prices will also face greater selling pressure.

Economists estimate PCE inflation to be 2.6%, with core PCE at 2.7%.

The Bureau of Economic Analysis will release July PCE inflation data on Friday, August 30. According to economists' estimates, the PCE annual rate is expected to reach 2.6%, higher than last month's 2.5%. Additionally, the PCE monthly rate is expected to be 0.2%, compared to 0.1% last month.

Economists expect that the core PCE inflation rate, excluding food and energy prices, will increase by 0.18% on a monthly basis and by 2.7% on an annual basis. These estimates are slightly higher than June's PCE figures, but the market generally believes that inflation will continue to decline.

José Torres, Senior Economist at Interactive Brokers, stated in an interview with Morningstar, "We will see inflation continue to make progress." He attributed this to the decline in commodity prices, crude oil, and gasoline prices. However, the rise in oil, natural gas, and gold prices today has made traders cautious.

If PCE inflation data exceeds expectations, Bitcoin and Ethereum prices may fall, triggering a widespread liquidation in the cryptocurrency market.

The European Central Bank is considering another rate cut on September 12, providing traders with more information before the Fed's planned rate cut on September 18. ECB policymakers have hinted at a high likelihood of a rate cut, and the market is closely watching inflation data for France, Italy, and the entire Eurozone this Friday.

According to the latest signals from Fed Chair Powell, the Fed expects to cut rates three times this year, possibly starting as early as September. However, if PCE inflation and employment data exceed expectations, the Fed may postpone the rate cut until November.

Meanwhile, the US stock and cryptocurrency markets have become more volatile as traders track Nvidia's earnings and PCE inflation data. Despite Nvidia's revenue and earnings exceeding expectations, the outlook for its sales this quarter did not satisfy investors, causing Nvidia's stock price to drop by about 8% in after-hours trading on Wednesday.

The CME Group's FedWatch Tool shows a 65.5% probability of a 25 basis point rate cut in September, and still indicates a total of 100 basis points of rate cuts this year.

Bitcoin saw a slight rebound yesterday, with trading volume decreasing by 23% in the past 24 hours, indicating a decline in traders' interest. Meanwhile, Ethereum's trading volume decreased by 25% in the past 24 hours. On the daily chart, the Ethereum price is currently facing strong resistance. CryptoQuant's indicator, known as the NVT Golden Cross, shows that Bitcoin is striving to surpass its previous peak. This indicates that the current upward trend is losing momentum. The NVT Golden Cross needs the support of a bull market to surpass the previous peak and resume its upward momentum.

Furthermore, $3.65 billion worth of Bitcoin options and $1.35 billion worth of Ethereum options are set to expire on the largest derivatives exchange, Deribit. This may further trigger long position liquidation for Bitcoin and Ethereum, potentially causing a market adjustment coinciding with the release of US PCE inflation data