Bitcoin prices have shown significant stability today. (Photo by Chesnot/Getty Images)Getty Images
Bitcoin prices have shown little volatility today, fluctuating within a reasonably defined range as global markets process the latest key economic data.
The world’s most prominent digital currency reached as much as $16,916.70 this morning, CoinDesk data shows.
The cryptocurrency, which had been trading between $16,800 and $16,900 since late last night, reached this intraday high after a U.S. government report showed that the personal consumption expenditures price index (PCE index), the Federal Reserve’s preferred measure of inflation, climbed 0.1% in November, down from a 0.4% increase in October.
The PCE index was up 5.5% from one year ago, compared to 6.1% last month.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Cooling inflationary pressures could give Federal Reserve policymakers greater flexibility to take a less aggressive approach toward containing inflation.
Since March, these officials have increased the target range for the benchmark federal funds rate rate by 425 basis points.
In that time, members of the Federal Open Market Committee have opted for four 75 basis-point rate hikes, the largest such increases since the 1990s.
As this benchmark rate increases, it places upward pressure on broader interest rates, a development that could potentially produce headwinds for risk assets, including cryptocurrencies and stocks, as investors choose interest-bearing financial instruments that pay higher yields than they did before.
If Fed policymakers take a less aggressive approach toward keeping inflation under control, it could prove beneficial to bitcoin markets, helping reduce a bearish factor that could adversely impact prices going forward.
CME FedWatch Tool
Regardless of how investors are responding to the latest PCE index data, figures provided by the CME FedWatch Tool this afternoon showed a greater than 65% chance that FOMC members will opt for a 25 basis point rate hike at next year’s first policy meeting.
The remaining odds were for a 50 basis point increase. The aforementioned tool calculates these figures by using 30-Day Fed Fund futures pricing data.
The chart below depicts these chances:This chart shows 65.9% odds that FOMC members will announce a 25 basis point rate hike at the next … [+] policy meeting. CME FedWatch Tool
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.