Bitcoin held above $83,000 on Thursday after giving back gains following the release of US inflation data. The cryptocurrency began the fourth quarter, historically its strongest period, near $83,550 after posting third-quarter gains of 42.7%, marking its best Q3 performance since 2017.
The Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, came in at 3.4% year-on-year in August, below expectations of 3.7%. Core PCE, which excludes food and energy, increased 3.0% from one year ago. However, methodology changes in the data collection process, affecting categories including portfolio management, computer software, and legal services, complicated interpretation of the reading. Market analysis suggested the methodology alone could reduce core PCE inflation by up to 20 basis points.
Bitcoin's latest rally reversed at $85,600 on Wednesday as traders responded to the inflation report. Data from CoinGlass identified a $60 million cluster of estimated liquidation exposure near $83,000, close to key support at $82,500 that analysts marked as critical for Bitcoin's rebound from June lows.
Broader equity markets declined following the PCE release. The S&P 500 closed Wednesday down 0.25% at 7,651 points, while the Dow Jones Industrial Average shed 0.86%. CME FedWatch Tool data showed markets assigned approximately 37% probability to a quarter-percentage-point rate increase at the Federal Reserve's October meeting, with markets favoring an unchanged federal funds target range at 3.75%–4%.
Bitcoin's price increased 35% from its August low, while BTC-denominated open interest in futures fell almost 20%, reaching its lowest level since March. This divergence between price and leverage metrics potentially makes the current rally less susceptible to forced liquidations, according to onchain analysis.
