Bitcoin (BTC) Slips Despite Positive US Inflation Data... Open Interest Drops 20%

▲ Bitcoin (BTC)

Bitcoin (BTC), which attempted a rebound after the US Personal Consumption Expenditures (PCE) price index recorded a lower-than-expected level, was blocked at the $85,600 mark, giving back its gains. Despite the positive news of slowing inflation, soaring treasury yields and a decrease in open interest have held it back, showing a sideways trend around the $83,000 mark.

CoinTelegraph reported on October 1st that Bitcoin surged to $85,600 immediately after the inflation data release the previous day but failed to gain further upward momentum, falling back to the $83,000 level. The US August PCE inflation rate recorded 3.4% year-over-year, falling below market expectations. However, uncertainties due to changes in statistical calculation methods combined, causing market participants to hesitate in accepting it as a full signal for monetary easing.

The soaring bond yields also hampered Bitcoin. Even immediately after the inflation data release, the US 10-year Treasury yield remained in the low 5% range, showing no clear downward trend. With institutional investors' demand diversifying into Treasuries, which offer fixed returns, instead of non-yielding assets like Bitcoin, the short-term rally, which was based on expectations of interest rate cuts, revealed its vulnerability.

Supply and demand data from the derivatives market also warns of slowing upward momentum. While Bitcoin's price rebounded over 35% from its August low, Bitcoin-denominated open interest sharply declined by about 20%. This suggests that it's not a structural bull market accompanied by new capital inflows, but rather a technical rebound characterized by the liquidation of existing positions during a price appreciation phase.

Experts diagnosed that Bitcoin must decisively break through the $85,600 resistance level to resume a full-fledged upward trend. They pointed out that if the $83,000 support level breaks, a correction phase could unfold, pushing it down to the $80,875 and $75,585 support levels.

Despite the positive news of slowing inflation, Bitcoin, constrained by the burden of treasury yields, paused for breath around the $83,000 mark. Ahead of the October Federal Open Market Committee (FOMC) meeting, market attention is focused on whether Bitcoin can overcome the $85,600 resistance and reclaim bull market leadership.

[Article Key Summary]

-Bitcoin (BTC) rebounded to $85,600 following the announcement of a 3.4% slowdown in US PCE inflation but retreated to the $83,000 level due to profit-taking.

-The 10-year Treasury yield remaining in the 5% range and a 20% sharp drop in Bitcoin's open interest weakened the rally's momentum.

-Experts warned of potential further corrections to $80,875 and $75,585 if the $85,600 breakout fails.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. This content should be interpreted for informational purposes only.*