TechFlow News, May 29: Chloe (@ChloeTalk1), a columnist for HTX DeepThink and researcher at HTX Research, analyzed that the current crypto market is operating within a more complex macroeconomic pricing environment. The divergence between the U.S.’s two core inflation indicators is widening: Core PCE has risen to 3.3%, while Core CPI stands at 2.8%. On the surface, inflation does not appear to be surging uncontrollably; however, the PCE measure—given greater weight by the Federal Reserve—remains notably above the Fed’s 2% policy target, thereby eroding market bets on rate cuts.
This shift coincides with Kevin Warsh assuming the role of Fed Chair, further complicating policy communication. Markets had previously held some expectation that a new chair would pivot more swiftly toward accommodative policy—especially against the backdrop of the Trump administration’s explicit desire for rate cuts—leading risk assets to front-run liquidity normalization. Yet the latest PCE data suggests the Fed will struggle to send dovish signals quickly while inflation remains sticky.
More importantly, this round of inflationary pressure does not stem solely from traditional consumer demand but rather reflects a confluence of energy costs, tariffs, and expanding AI-related capital expenditures. Rising prices for AI-related software and hardware, higher food service costs, and energy cost pressures stemming from the Iran conflict collectively render PCE a more accurate reflection of current structural price pressures in the economy than CPI. Consequently, even if CPI appears relatively benign, the Fed may maintain a cautious stance.
For the crypto market, this development is not purely bearish but rather represents a phase of repricing liquidity expectations. BTC and major assets will remain under short-term pressure from fading rate-cut expectations, elevated real interest rates, and a stronger U.S. dollar. However, if inflation stems primarily from supply shocks and structural capital spending—not broad-based demand overheating—the market may avoid entering a deep bear cycle and instead exhibit heightened volatility, pronounced divergence across assets, and accelerated narrative rotation.
Note: This article does not constitute investment advice nor any offer, solicitation, or recommendation regarding any investment product.
