Behind the PCE meeting expectations, the crypto market is experiencing a dual struggle between the strength of the US dollar and institutional demand

U.S. November Core PCE Price Index Year-over-Year 2.8%, Fully in Line with Market Expectations. This seemingly ordinary data releases an important signal: U.S. inflation has stabilized within a controllable range, laying the foundation for a strong reversal of the dollar. For the crypto market, this signal indicates that a new asset allocation shift is underway.

The Logic Behind the Dollar Reversal Amid Stable Inflation

Core PCE is the Federal Reserve’s most closely watched inflation indicator. The 2.8% reading suggests that inflationary pressures have not rebounded. This provides a reason for the dollar’s strength. According to ARK Fund’s latest 2026 outlook report, the dollar will experience a strong reversal, based on the core logic of an AI-driven combination of deflation and dollar appreciation expectations.

This expectation has internal rationality: when inflation stabilizes and the dollar appreciates, the appeal of traditional safe-haven assets (such as gold) diminishes. ARK’s analysis points out that gold has already overextended its inflation fears. Currently, the market value of gold relative to U.S. M2 has reached extreme levels—exceeding the levels seen during the late 1970s hyperinflation period, only below the Great Depression of the 1930s. In the absence of hyperinflation or monetary tightening, this is considered an “irrational prosperity.”

New Opportunities in the Crypto Market

Interestingly, a strong dollar and stable inflation may not be bad news for the crypto market. ARK’s conclusion is that Bitcoin, as an independent asset, will become the configuration and breakout year of 2026.

This judgment is based on several key factors:

Institutional demand remains strong

According to CryptoQuant data, in the past year, U.S. custodial wallets have net added approximately 577,000 BTC, worth about $53 billion. This indicates continuous inflows of institutional funds into Bitcoin, treating it as a long-term asset rather than a speculative tool.

Asset rotation effect

ARK expects that after gold peaks, the spillover funds will flow into Bitcoin. The logic is clear: if dollar appreciation suppresses gold, institutional investors seeking low-correlation assets will turn to Bitcoin. Bitcoin has very low correlation with bonds, gold, real estate, and the S&P 500, effectively optimizing portfolio Sharpe ratios.

The Complexity of Market Reality

But reality is more complex than theory. Last week, the average daily inflow into the U.S. spot Bitcoin ETF reached $843.62 million, yet Bitcoin’s price fell from nearly $97,000 to about $92,263. Analysis indicates that selling pressure from U.S. whales has become a resistance to upward movement, and the Coinbase Premium Gap being negative suggests U.S. traders are more active during the weekend when traditional markets are closed.

This reflects the current market situation: institutional long-term demand remains strong, but short-term profit-taking and selling pressure from U.S. traders cannot be ignored.

Future Focus

The PCE data meeting expectations supports the dollar reversal, but the real test lies in:

• Whether the Federal Reserve will maintain its current policy stance
• Whether Trump’s administration’s tariff policies will reignite inflation expectations (which could change the entire logic))
• Whether institutional funds will continue to flow in or be affected by short-term volatility

Summary

Meeting expectations for PCE is not directly positive for the crypto market, but it confirms the expectation of dollar strength, which could trigger an asset rotation from gold to Bitcoin. The key is the sustainability of institutional demand—if custodial wallets continue to grow, short-term selling pressure is just normal fluctuation in the allocation process. The current market focus is whether institutional long-term demand can outweigh short-term profit-taking by U.S. traders.