Bitcoin briefly climbed above $85,500 after August U.S. inflation data came in below expectations, but the move quickly reversed, sending BTC back toward $84,000 less than two hours after the release.
Core PCE inflation rose 0.2% in August, below the 0.3% forecast. On a year-over-year basis, core PCE increased 3%, compared with economists’ estimate of 3.3%.
Bitcoin jumped more than 2% within minutes of the government’s PCE report, reaching above $85,500 as traders reacted to the softer inflation figures. After leveraged short positions were squeezed, however, the cryptocurrency gave back most of the advance and returned to its pre-report level near $84,000.
U.S. equities maintained their gains. The Nasdaq rose more than 1% to a session high, while Treasury yields edged lower.
Chicago PMI exceeds expectations
The Chicago PMI rose sharply to 58.8 in September from 47.1 the previous month, beating economists’ projection of 51.2.
The stronger regional manufacturing reading arrived as markets began surrendering part of the immediate gains triggered by the PCE data roughly 90 minutes earlier.
The 10-year Treasury yield was down 1.2 basis points at 5.248%, while bitcoin traded around $84,550, about $1,000 below its post-PCE high.
Markets reduce October Fed hike bets
Expectations for an October Federal Reserve rate increase had already declined following a dovish speech from New York Fed President John Williams the previous day.
The softer inflation report pushed those expectations lower. CME FedWatch showed traders pricing a 47.1% probability of a rate hike at the Fed’s Oct. 28 meeting, down from 70% approximately 48 hours earlier.
The Bureau of Labor Statistics also changed how it calculates certain components of the PCE inflation gauge. Some market participants noted that the methodological adjustment may have contributed to the weaker-than-expected reading.
Bitcoin rises as Treasury yields fall
Following the PCE release, bitcoin gained about 1% to $84,750 as traders absorbed the softer inflation figures.
The 10-year Treasury yield fell 4.2 basis points to 5.218%, while the two-year yield declined 2.1 basis points to 4.868%. U.S. stock index futures were up around 0.4%.
The headline PCE price index increased 0.3% in August, compared with 0.1% in July and a 0.4% forecast. Annual PCE inflation remained at 3.4%, unchanged from July and below the 3.7% estimate.
Core PCE prices increased 0.2% on the month and 3% from a year earlier. Both readings were below forecasts of 0.3% and 3.3%, respectively.
ADP hiring beats estimates
The U.S. private sector added 90,000 jobs in September, according to ADP. That compared with 36,000 new jobs in August and economists’ expectation of 70,000.
Markets were also looking ahead to Friday’s government employment report for September.
Bitfinex points to real yields as BTC headwind
Bitfinex analysts said rising inflation-adjusted Treasury yields remain an important headwind for bitcoin.
The 10-year real yield rose to 2.83% from 2.68% in the week through Sept. 25. Higher real yields increase the opportunity cost of holding non-yielding assets such as bitcoin and gold.
Multicoin Capital backs Grass
Multicoin Capital has invested in Grass, a platform focused on providing data and context for machine intelligence, through its hedge and venture funds.
The company said Grass has demonstrated commercial viability by generating significant revenue and reaching profitability after initially supplying pretraining data to leading AI laboratories through millions of residential connections.
Multicoin said it expects Grass to become infrastructure for autonomous AI agents through specialized search and content APIs designed to serve the growing market for real-time context retrieval during AI inference.
S&P 500 breadth deteriorates
Only 25% of S&P 500 companies were trading above their 50-day moving averages, the lowest level since April 2, according to The Kobeissi Letter.
The figure has fallen sharply from 70% in mid-August, showing a significant deterioration in market breadth.
Crypto markets remained relatively resilient compared with equities.
Bitcoin and gold await PCE report
Ahead of the inflation release, bitcoin traded slightly higher around $83,700, while gold remained just below $4,200 an ounce.
PCE inflation was the main U.S. macroeconomic event for the day because it is the Federal Reserve’s preferred inflation measure. Economists had expected core PCE to rise 0.3% monthly and 3.3% annually, while GDP growth was forecast at 1.5% quarter over quarter.
Markets had been pricing a 57% chance that the Fed would leave interest rates unchanged at its Oct. 28 meeting.
Standard Chartered projects $2 ENA by 2028
Standard Chartered began coverage of Ethena’s ENA token with a $2 target for the end of 2028, almost 670% above its market price of roughly 26 cents at the time.
The bank cited increased demand for yield-bearing stablecoins and the expansion of tokenized assets across both decentralized and traditional financial markets. It also highlighted USDe’s rapid growth to a $10 billion market capitalization within its first nine months.
Standard Chartered pointed to Ethena’s buyback-and-burn program and estimated that USDe supply could reach $40 billion by 2028. Slower adoption and weaker real-world asset growth were cited as potential risks.
Gold watches $4,200 level
Gold hovered near $4,200 an ounce, with Simon-Peter Massabni of XS.com describing the level as a key point between buyers supporting the wider trend and sellers expecting a deeper correction.
Massabni said gold would need a daily or four-hour close above $4,200 to confirm another leg higher.
Federal Reserve policy remains an important short-term driver. Since gold does not generate interest, expectations for higher rates can increase the relative appeal of bonds and cash.
Massabni said a hotter-than-expected PCE reading could produce another wave of short-term selling in gold.
After the inflation report, attention will shift to the monthly U.S. jobs data. A weaker-than-expected employment reading could reduce expectations for additional rate increases.
Bitcoin had been under pressure before PCE
Before the inflation figures were released, bitcoin was down 0.3% at around $83,700 as traders waited for the PCE report.
A stronger inflation reading could have reinforced rate-hike expectations that had contributed to the month’s bond selloff. Brent crude had climbed above $103 a barrel and was up roughly 14% for September, even as Middle East oil flows returned to pre-war levels.
Treasuries stabilized after the 30-year yield reached its highest point since 2002, while the dollar remained near its strongest level since July.
Ether was down 0.7% at roughly $2,690. HYPE fell almost 2%, the weakest performer among major cryptocurrencies, while XRP and TRX each gained less than 1%, according to CoinDesk data.
CryptoQuant estimated that bitcoin’s spot demand had contracted by approximately 170,000 BTC over the previous 30 days. Growth in futures demand had fallen 90% since Sept. 14.
Micron Technology was scheduled to release earnings after the U.S. market close, providing another test for AI-linked stocks that had helped cushion the S&P 500 during the recent bond selloff.
