Bitcoin held steady on Thursday as US equities rebounded on relief from the latest inflation readings, with risk assets broadly recovering from an earlier-week sell-off in semiconductor shares.

PCE Reverses Uptrend but Remains Above Fed Target

Data from TradingView showed BTC trading around $64,500, little changed from the prior day. The cryptocurrency avoided a sharp reaction to the June US Personal Consumption Expenditures (PCE) print, which reversed a months-long uptrend in the inflation gauge.

The S&P 500 and Nasdaq Composite rose 1% and 2.3%, respectively, during the US trading session.

The June PCE index came in at 3.7% year-on-year, in line with market expectations. May's figure of 4.1% had been the highest in three years. PCE is widely regarded as the Federal Reserve's preferred inflation measure because it captures a broader range of price changes and adjusts more quickly to shifts in consumer spending patterns, according to the Federal Reserve Bank of Cleveland. Because Fed rate decisions directly influence dollar liquidity conditions that have historically driven risk-asset valuations, each PCE release has functioned as a catalyst event for crypto markets throughout the current tightening cycle.

In its data release, the US Bureau of Economic Analysis (BEA) stated: "The increase in current-dollar personal income in June primarily reflected increases in compensation, personal income receipts on assets, and government social benefits that were partly offset by a decrease in farm proprietors' income."

The BEA further noted: "The $65.2 billion increase in current-dollar PCE in June reflected increases of $58.2 billion in spending on services and $7.0 billion in spending on goods." The continued tilt toward services spending reflects a structural pattern in the post-pandemic US economy that has contributed to the persistence of above-target inflation.

Although the June print marked the first month-on-month decline in PCE since 2020, reactions were measured. Trading resource The Kobeissi Letter observed on X that the 3.7% reading was still the second-highest result since October 2024.

"US inflation continues to run at nearly double the Fed's 2.0% target," The Kobeissi Letter wrote.

Johns Hopkins economist Steve Hanke echoed that concern on X, calling inflation "the genie the Fed just can't put back in the bottle," while noting the persistent gap with the 2% objective.

Bitwise CIO: Bitcoin to Grow Less Sensitive to Rate Moves

The Federal Reserve left interest rates unchanged at its latest meeting on Wednesday, with a growing divide among Federal Open Market Committee (FOMC) members over the appropriate policy path. The split reflects a broader debate between officials prioritizing remaining inflation pressures and those concerned about the cumulative impact of sustained higher rates on economic growth and labor markets.

Following the decision, Matt Hougan, chief investment officer at crypto asset manager Bitwise, predicted on X that future rate announcements would carry less weight for Bitcoin's price.

"Rationale: Throughout bitcoin's history, interest rates swung wildly -- from 0% to 2.5% to 0% to 5% to 3.5%. Changes have been measured in whole percentage points. But future changes seem likely to be more modest; the CME expects a 50bps rise over the next year," Hougan wrote, citing expectations tracked by the CME Group FedWatch Tool.

Hougan added that newly appointed Fed Chair Kevin Warsh is likely to mirror former chair Alan Greenspan in the magnitude of rate adjustments, departing from the approach of his predecessor, Jerome Powell.

Prior to Warsh's confirmation, US President Donald Trump repeatedly signaled his expectation that Warsh would take a dovish posture on rates -- a stance seen as supportive of risk-asset performance.

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