Analysts warn that changes in statistical methods make it more difficult to interpret inflation figures that are lower than expected, and Bitcoin has given back some of its previous gains after the release of the PCE data.
On Thursday, Bitcoin ( BTC ) remained above $83,000 after U.S. inflation data fell short of expectations, but the previous gains had already been reversed.
Key points:
- Bitcoin reverses its gains after the announcement of PCE
- Coinbase data shows that after a brief fluctuation at the end of September and before the close of the third quarter, BTC / USD remained relatively stable on that day.
The 1-hour chart of Cointelegraph / TradingView shows that BTC / USD fluctuated briefly during the day before trading sideways.
According to the data from CoinGlass, Bitcoin rose by 42.7% in the third quarter, achieving its best performance in a third quarter since 2017; entering the strongest fourth quarter in history, the price was around $83,550.
The quarterly return screenshot of CoinGlass demonstrates this performance.
The liquidation heat map of CoinGlass shows that there are potential liquidation clusters both above and below the current price of Bitcoin.
On Thursday, the estimated clearing risk added a cluster of $60 million, located near $83,000, close to the key support level of $82,500. Analysis suggests that this level is crucial for Bitcoin to launch a broader rebound from its June lows.
The Bitcoin heat map of CoinGlass shows the aforementioned situation.
An official statement from the Bureau of Economic Analysis ( BEA ) stated: "Excluding food and energy, the PCE price index rose by 3.0% year-on-year." This refers to the core PCE.
The statement also includes methodological adjustments, which cover portfolio management and investment advice, computer software and accessories, as well as legal services.
Market commentary media The Kobeissi Letter wrote on X: "We estimate that merely the methodology alone could reduce core PCE inflation by up to 20 basis points." The media also noted that overall PCE and core PCE inflation in July were also revised down by 30 basis points.
Kobeissi expects the market to "strongly discount" the August figures. On Wednesday, the S&P 500 index closed down 0.25% at 7,651 points, and the Dow Jones Industrial Average fell 0.86%.
CME FedWatch Tool data shows that as of Wednesday, the probability of the Federal Reserve raising interest rates by 25 basis points at its October meeting was around 37%, with little change on that day. Unlike last week, the market is more inclined to maintain the federal funds target rate range between 3.75% and 4% unchanged.
Open interest falls to lowest since March despite Bitcoin gains
Despite the rise in Bitcoin, the decrease in open futures contracts may make this rebound less susceptible to forced liquidation, according to the on-chain analysis platform Glassnode.
Glassnode pointed out that there is a divergence between the price of Bitcoin and the open interest contracts denominated in BTC ( OI ). This indicator measures the open futures positions denominated in Bitcoin.
"The price has risen by 35% from its August low, while the number of open contracts denominated in coins has decreased by nearly 20%," the institution wrote on X.
This has brought the number of open contracts to their lowest level since March, which may make this round of gains less susceptible to the impact of leverage liquidations.
Cointelegraph Previous reports have indicated that sell orders around $85,000, as well as the chips held by long-term holders in the range of $84,000 to $85,000, may strengthen the resistance above the current price level.
Related topics
- Bitcoin
- Inflation
- Market
- Market Analysis
