Bitcoin Rally Stalls at $80,000 as Traders Await Inflation Data

(Bloomberg) -- Bitcoin's ( BTC-USD ) rally is running into resistance at the psychologically important $80,000 level as traders await key US monetary policy signals to gauge whether the past week's gains have room to run.

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The largest cryptocurrency advanced 1% on Wednesday to about $79,000 as of 9:20 a.m. in London. It briefly broke through $81,000 on Tuesday before giving up gains as some investors moved to lock in profits from the biggest weekly advance in over three years.

Bitcoin remains up about 22% since Treasury Secretary Scott Bessent said on Aug. 20 that the US would "at least double" planned purchases of outstanding 10- to 30-year debt. Yet the digital asset's advance has stalled as investors look out for upcoming monetary policy cues, including today's release of the latest personal consumption expenditures price index data.

"The pullback came on profit-taking ahead of tonight's core PCE inflation release" and an anticipated address by US Federal Reserve Chairman Kevin Warsh on Friday at the Jackson Hole Economic Policy Symposium, said Tony Sycamore, an analyst at IG Australia.

Signs of de-escalation in the Middle East have also taken some momentum out of the rally. Sycamore said the sharp fall in oil prices and US yields suggests "further Treasury intervention may not be needed for now."

This could make it difficult for Bitcoin to break above the $80,000 to $83,000 zone. Like gold, the digital asset may have "already struck a short-term high," Sycamore said. A sustained move higher, though, could open the door for Bitcoin to reach $95,000 to $100,000, he added.

Demand for US exchange-traded funds remains a source of support. US-listed spot Bitcoin funds recorded about $314 million of net inflows on Tuesday, their fifth consecutive session with more than $300 million, suggesting institutional appetite has held up even as the token retreated from its latest high.

Signals beneath the surface remain mixed.

Relative strength index "readings across several major tokens point to overbought conditions, suggesting near-term consolidation is plausible rather than an uninterrupted run higher," said Rachael Lucas, an analyst at BTC Markets.

Nicolai Søndergaard, a senior research analyst at Nansen, described Bitcoin as in a "late-stage bottoming process." Along with improved ETF flows, selling pressure has eased and large token holders have resumed selective accumulation. However, data still show weak US spot demand, he said.