BTC Maintains Position Above $83K Mark Despite Fading Post-Inflation Rally
The leading cryptocurrency gave up its gains following PCE data release as market experts warned that modifications to calculation methods cast doubt on the surprisingly low inflation figures.
The price of Bitcoin (BTC) maintained its position above the $83,000 threshold on Thursday, despite surrendering earlier gains that followed the release of US inflation figures that came in below market expectations.
Key points:
- The digital currency continued trading within a range following the conclusion of its most recent upward movement at $85,600.
- The Personal Consumption Expenditures inflation metric registered at 3.4% on an annual basis, falling short of forecasts, though changes to calculation methodology muddied the interpretation.
- Open interest measured in BTC terms declined by nearly 20% even as the asset's value climbed 35% from its low point in August.
Bitcoin gives back gains after PCE release
Information from Coinbase indicated the BTC/USD trading pair finished the day essentially unchanged following a short period of price swings occurring just before September's monthly period and third-quarter conclusion.
The leading cryptocurrency commenced the fourth quarter, which has historically represented its most robust three-month period, trading near $83,550, following a third-quarter increase of 42.7%, based on information provided by CoinGlass — representing its strongest Q3 showing since the year 2017.
The liquidation heatmap provided by CoinGlass revealed potential concentrations of liquidations positioned both above and below the current market price of Bitcoin.
During Thursday's trading session, a fresh cluster representing approximately $60 million in estimated liquidation exposure materialized in the vicinity of $83,000, positioned close to crucial support at the $82,500 level — a price point that market analysis identified as essential for Bitcoin's wider recovery from the lows recorded in June.
The most recent upward price movement for Bitcoin came to a halt on Wednesday, with the BTC/USD pair experiencing a reversal at the $85,600 level. This advance came on the heels of a US inflation measurement that registered below market expectations. The Personal Consumption Expenditures (PCE) price index, which serves as the Federal Reserve's favored measure for tracking inflation, registered at 3.4% year-on-year for August, compared to market expectations calling for 3.7%.
"Excluding food and energy, the PCE price index increased 3.0 percent from one year ago," an official release from the Bureau of Economic Analysis (BEA) stated, referring to core PCE.
The data release additionally incorporated changes to measurement methodology that impacted categories including portfolio management and investment advice, computer software and accessories, and legal services.
"We estimate the methodology alone could reduce Core PCE inflation by up to 20 basis points," market commentary publication The Kobeissi Letter wrote on X, noting that July headline and core PCE inflation had also been revised downward by 30 basis points.
The Kobeissi Letter predicted that financial markets would "heavily discount" the August measurement. The S&P 500 concluded Wednesday's session with a decline of 0.25% to reach 7,651 points, while the Dow Jones Industrial Average experienced a loss of 0.86%.
Information from the CME FedWatch Tool indicated that financial markets assigned approximately 37% probability to a quarter-percentage-point rate increase at the Federal Reserve's October policy meeting on Wednesday, reflecting minimal change from earlier in the day. In contrast to the previous week, markets now favored maintaining the federal funds target range at its current level of 3.75%–4%.
Open interest falls to lowest since March despite Bitcoin gains
Declining futures open interest has the potential to render Bitcoin's price rally less exposed to forced liquidations, based on analysis from onchain analytics platform Glassnode.
The analytics firm drew attention to a divergence between the price trajectory of Bitcoin and BTC-denominated open interest (OI), which tracks the total value of outstanding futures positions calculated in Bitcoin terms.
"Price is up 35% from the August low, while coin-denominated open interest is down almost 20%," it wrote on X.
"That puts open interest at its lowest since March, potentially making the rally less susceptible to leverage flushes."
As previously documented by Cointelegraph, sell orders concentrated around the $85,000 price level and long-term holder coins grouped within the $84,000–$85,000 range have the potential to strengthen resistance above the current trading price.