On Thursday, Bitcoin (BTC) stayed above $83,000 following a retracement of gains that were initially triggered by cooler-than-projected US inflation metrics.
Key points:
- Bitcoin consolidated inside a range after its most recent upward push stopped short at $85,600.
- Year-on-year US PCE inflation figures landed softer than anticipated at 3.4%, although updates to calculation methods obscured the data.
- Open interest measured in BTC dropped nearly 20% even as the asset climbed 35% relative to its August trough.
Bitcoin gives back gains after PCE release
Figures provided by Coinbase indicated that the BTC/USD pair remained unchanged throughout the session amid brief market fluctuations prior to the conclusion of September and the third quarter.
BTC/USD one-hour chart. Source: Cointelegraph/TradingView
Entering the fourth quarter—traditionally its strongest period—Bitcoin traded near $83,550 after securing a 42.7% Q3 gain according to CoinGlass data, marking its highest third-quarter return since 2017.
BTC/USD quarterly returns (screenshot). Source: CoinGlass
Liquidation maps from CoinGlass highlighted concentrations of potential liquidations both above and below the current spot value.
An estimated $60 million cluster of liquidation exposure emerged on Thursday near $83,000, sitting close to primary support at $82,500, a threshold identified previously as vital for Bitcoin’s broader recovery from June lows.
BTC liquidation heatmap. Source: CoinGlass
The recent upward surge in Bitcoin stalled on Wednesday as BTC/USD faced rejection at $85,600. This advance followed a softer US inflation report involving the Personal Consumption Expenditures (PCE) price index—the Federal Reserve’s preferred inflation benchmark—which registered a 3.4% annual increase for August against the anticipated 3.7%.
Core PCE, which strips out food and energy costs, showed a 12-month expansion of 3.0%, according to an official report issued by the Bureau of Economic Analysis (BEA).
US PCE index. Source: BEA
Additionally, the publication factored in adjustments to methodologies impacting areas like portfolio administration, financial advisory services, software applications and peripherals, along with legal offerings.
Market research newsletter The Kobeissi Letter mentioned on X that these updates alone could shave as much as 20 basis points off Core PCE inflation, while highlighting that July headline and core numbers were likewise revised down by 30 basis points.
Kobeissi projected that financial markets would heavily discount the August print. By Wednesday’s close, the S&P 500 slipped 0.25% to reach 7,651 points, and the Dow Jones Industrial Average dropped 0.86%.
Data sourced from the CME FedWatch Tool indicated a roughly 37% likelihood of a quarter-point rate hike during the central bank’s October gathering, holding steady over the day. Contrary to the previous week, market participants favored maintaining the federal funds target band at 3.75% to 4%.
Fed target-rate probability comparison for October FOMC meeting (screenshot). Source: CME Group
Open interest falls to lowest since March despite Bitcoin gains
Shrinking futures open interest could leave Bitcoin’s advance less susceptible to cascading liquidations, according to insights from onchain intelligence firm Glassnode.
Related: Altcoin exchange deposit count jumps 160% in 2 weeks
Glassnode drew attention to a growing divergence between Bitcoin spot pricing and open interest denominated in BTC, which tracks active derivatives contracts valued in coins.
They noted on X that prices have advanced 35% from August lows while coin-denominated open interest decreased by nearly 20%.
This drop brings open interest to levels unseen since March, which could mean the upward trend is less vulnerable to sudden leverage washouts.
Bitcoin coin-denominated OI vs. BTC/USD. Source: Glassnode on X.com
As previously highlighted by Cointelegraph, selling pressure near $85,000 alongside accumulations of long-term holder inventory between $84,000 and $85,000 may continue to present significant overhead resistance.
This content was generated in alignment with Cointelegraph’s Editorial Policy for informational purposes exclusively, and it should not be construed as financial advice or recommendations. All trading and investments involve inherent risk; readers should perform their own due diligence.
Originally published at https://cointelegraph.com/markets/bitcoin-rally-lower-us-inflation-data?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound.
