Summary
- Core PCE inflation for August rose by 3.0% year-over-year, lower than the anticipated 3.3%, while headline PCE came in at 3.4%, below the expected 3.7%. The likelihood of a rate hike in October is now at 34.9%.
- Bitcoin climbed past $85,000, reaching a peak of $85,598.94 before settling back to $84,376, reflecting a 0.9% increase. This price remains within the range it has maintained since its surge in September.
- Market sentiment on Myriad indicates only a 7% chance of Bitcoin surpassing its all-time high of $126,199 before 2027, and interest in ETFs has since diminished following a previous influx of $2.4 billion.
Bitcoin continues to exhibit stability, a contrast to the volatility seen on Wall Street.
The Federal Reserve's favored inflation measure, the PCE index, increased by 0.3% in August and 3.4% year-over-year, which is below the expected 0.4% and 3.7% respectively. Core PCE, which excludes food and energy prices, rose by 0.2% month-over-month and 3.0% annually, against forecasts of 0.3% and 3.3%.
In response to the inflation data, Bitcoin surged to $85,598.94 before retracting to $84,376.09. The overall cryptocurrency market capitalization increased slightly by 0.6%, nearing $3 trillion.
The PCE data has shifted discussions for October. The CME's FedWatch tool now indicates a 62% probability that the Fed will maintain interest rates, with a 37% chance of a 25-basis-point increase.
Recent trends show that bets on rate hikes have been decreasing, which is generally positive for risk assets. An increase in rates typically raises borrowing costs and strengthens the dollar, while lower rates can enhance market liquidity, potentially benefiting investments like Bitcoin.
However, it’s important to note that a 3.0% core inflation rate still exceeds the Fed's target of 2%.
The yield on 10-year Treasuries reached approximately 5.25% on Tuesday, marking its highest level since 2002. The S&P 500 declined by 0.2% to 7,670.84, while the Dow Jones and Nasdaq dropped by 0.3% and 0.1% respectively. Brent crude oil briefly rose above $100 before settling at $96.16, influenced by ongoing tensions in the U.S.-Iran conflict affecting shipments in the Strait of Hormuz. Consumer confidence fell to a 12-year low, with August job openings reported at 7.08 million, below expectations.
Despite Bitcoin's resilience, traders on Myriad remain cautious. The prediction market, which uses the previous Bitcoin record of $126,199.63 on Binance as a benchmark, shows only a 7% likelihood of reaching a new all-time high before 2027, requiring a nearly 50% increase in the next three months.
Currently, traders are pricing in a 49% chance that Bitcoin will stay above $84,000 in the near term, with a 21% probability of it rising above $86,000 by Monday.
Bitcoin's Price Movement: A Surge Followed by a Correction
Today, Bitcoin opened at $83,624.30, peaked at $85,598.94, and adjusted to its current price of $84,376.09, marking an increase of $751.62 or 0.9%. This correction follows a significant upward movement. After dipping below $75,000 in mid-September, Bitcoin surged following a substantial ETF inflow on September 21, the largest of 2026, combined with a wave of short liquidations that propelled it to $87,354, its highest level since January.
In the past week, Bitcoin has fluctuated within a narrow range of approximately $82,600 to $85,600.
The Average Directional Index (ADX), which assesses the strength of a trend regardless of its direction, shows a reading of 41.9 for Bitcoin, indicating a strong trend with buyers in control. However, since ADX is a lagging indicator, its current high is a result of the recent price surge and may remain elevated even during sideways price action.
Exponential moving averages (EMAs) highlight trends by giving more weight to recent prices. The 50-day EMA is currently at $77,809.88, above the 200-day EMA of $74,423.93. A bullish trend is indicated when the shorter average lies above the longer one, and the EMA chart shifted from red to green in September after Bitcoin spent much of the summer below the 200-day average. Currently, Bitcoin's price is around 8% above the 50-day EMA, suggesting a potential retest of this average before a further upward move.
The Relative Strength Index (RSI), which measures buying versus selling pressure on a scale of 0-100, is at 63.4, indicating that while buyers are in control, they are not yet exhausted, allowing for further gains before profit-taking typically occurs.
Overall, the technical indicators suggest a bullish trend and momentum; however, Bitcoin is struggling to break above the $85,599 resistance level. Traders are looking for daily closes above this threshold and ideally above $87,354 to confirm a sustained upward trend, with the ADX remaining above 25 as additional validation.
While the inflation concerns have subsided for now, challenges in the bond market remain. The post-PCE price increase for Bitcoin stalled at $85,599, a level that has capped its movement throughout the week. Although the favorable inflation data provided a temporary boost for bulls, a breakout has yet to materialize.
Disclaimer
The opinions expressed in this article are solely for informational purposes and do not represent financial or investment advice.