Bitcoin briefly hit $85,600 on Wednesday morning before rolling over, according to Bitstamp data. The move came on the heels of better-than-expected August PCE inflation data, which sparked immediate short covering in the derivatives market.
Within four hours, $55 million in short positions liquidated against just $27 million in long liquidations—a 2-to-1 skew that signals capitulation among bearish traders. But the rally didn't hold. Bitcoin tumbled from its peak to $84,350 by 10:35 a.m. EST, erasing most intraday gains.
The asset now trades above $84,000, up 1.3 percent on the day. It closed September with a 7.3 percent monthly gain and posted a 37 percent quarterly advance for Q3.
Before Wednesday's surge, Bitcoin had been range-bound between $83,000 and $83,500 after a Monday plunge to $82,555. The $83,500 level proved stubborn resistance through late Tuesday, with repeated rejections keeping the asset capped.
The PCE data print was softer than feared, but that doesn't mean rate cuts are coming. The Federal Reserve already hiked 25 basis points recently, and Sal Guatieri, senior economist at BMO Capital Markets, said the August data may give the central bank room to skip October 28. Still, Guatieri noted elevated inflation, a resilient consumer and strong economic growth point to another rate hike by year-end.
A second hike would pit Fed Chair Kevin Warsh against the Trump administration and likely cap upside for risk assets like Bitcoin.
Chart analysts see further downside before the next leg up. Ted Pillows on X highlighted a fractal pattern similar to early 2023, when Bitcoin dropped sharply after confirming a cycle bottom. His analysis suggests the high $70,000s could be the target before sustained buying returns.
