The April Personal Consumption Expenditures Price Index (PCE) in the United States met expectations, indicating that inflation stickiness remains strong, although not worsening. In response to this, Nansen’s chief analyst warned that the longer we stay in a high-interest-rate environment, the greater the downside risks.
Yesterday evening, the US Federal Reserve (Fed) released the PCE, an inflation indicator it closely monitors. The data showed that in April, the overall PCE increased by 0.3% compared to the previous month and by 2.7% compared to the same month last year, remaining unchanged. Additionally, the core PCE in April increased by 0.2%, lower than the 0.3% increase in March, also meeting expectations.
Despite the slightly higher year-on-year growth rate of 2.8% compared to the estimated 2.7% for three consecutive months, it indicates that inflation has not continued to worsen. After the data was released, the four major US stock indices had mixed performance. The Dow Jones and S&P 500 indices rose by 1.51% and 0.8% respectively, while the Nasdaq and Philadelphia Semiconductor indices fell by 0.01% and 0.96% respectively.
Nansen analyst Aurelie Barthere pointed out that inflation stickiness remains strong and that the current market has already reacted in advance to the Fed’s expected two interest rate cuts in 2024. She warned that the slowdown in economic growth is unfavorable for cryptocurrencies and advised investors to pay attention to signs of weak economic growth, despite their strategic optimism regarding the current cryptocurrency market.
On the other hand, although the Bitcoin spot ETF has attracted nearly $13.86 billion in inflows since its listing, CNBC reported that the acceptance of cryptocurrency products among financial advisors remains low, although some advisors are considering recommending it in the future. Many advisors are adopting a wait-and-see attitude towards the Bitcoin spot ETF, and the main factors affecting its adoption are “market timing” and “regulatory compliance.” Ted Jenkin, the founder and CEO of Atlanta-based oXYGen Financial, stated:
In addition, some large financial institutions, such as Vanguard (the world’s second-largest asset management giant), have not shown trust in Bitcoin ETFs, which also affects the adoption rate among advisors. It is worth our continuous observation to see if the Bitcoin spot ETF can penetrate the market of more traditional investors in the future as time passes and regulations become clearer.
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