Bitcoin Holds Lower After Inflation Data. September Worries Are Building.

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Bitcoin
and other cryptocurrencies were slipping after key inflation data, continuing to move lower after a rally this week following a pro-crypto court ruling. Traders are beginning to worry about September and what is historically a tough month for Bitcoin.

The price of Bitcoin has retreated less than 1% over the past 24 hours to $27,250, ticking up slightly, by about $50, after the release of U.S. inflation data. The largest digital asset continues to slip back from a peak above $28,000, reached on Tuesday after a U.S. court ruled against the Securities and Exchange Commission in a landmark case that should pave the way for a spot Bitcoin exchange-traded fund.

“The crypto market is cooling after a surge in buying,” said Alex Kuptsikevich, an analyst at broker FxPro. “Bitcoin briefly dipped to $27,000 on Wednesday, about half of its initial jump from $26,000 to $28,000 and back below its 200-day and 200-week averages, despite the increased traction of risk in traditional markets.”

Indeed, Bitcoin has lagged the
Dow Jones Industrial Average
and
S&P 500
in recent days in a continuation of a trend that has ushered in one of the quietest periods for prices in crypto history. Traders’ bets that Thursday would usher in a new catalyst in the form of personal consumption-expenditures (PCE) data, which is the Federal Reserve’s preferred measure of inflation, seem to have fallen flat.

Core PCE in July rose 4.2% year over year, up from a 4.1% annual rate recorded in June but in line with analysts’ expectations.

Economic data remain key for risk-sensitive assets as investors shift expectations over the outlook for interest rates, which the Fed has cranked to a generational high since March 2022—slamming Bitcoin and stocks alike—in a bid to tame inflation. Signs of a weakening economy could give the Fed reason to pause action on rates and even consider cutting borrowing costs sooner, putting the August jobs report on Friday firmly in focus after Thursday’s inflation print.

If the jobs report due Friday shows employment slowing, it could help “stir Bitcoin into action again to make another push into the late $20,000s after Tuesday’s rally quickly faded,” said Antoni Trenchev, co-founder and managing partner at crypto lender Nexo.

It may be the last chance for digital assets to jump higher before September trading gets underway in earnest, ushering in what is historically one of the worst months for Bitcoin.

“If history is a guide, August is just an entrée for the main dish that’s September, which has only witnessed two monthly gains in a decade, the last of which was 2016,” said Trenchev.

Beyond Bitcoin,
Ether
—the second-largest crypto—was down less than 1% to $1,710. Smaller tokens or altcoins were more mixed, with
Cardano
up less than 1% and
Polygon
almost 2% in the green.
Dogecoin
was up 3% and
Shiba Inu
fell less than 1%.

Write to Jack Denton at [email protected]

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