Bitcoin Recovers to $84K After Early Advance Loses Momentum

Bitcoin’s reaction to softer-than-expected U.S. inflation proved short-lived, with BTC falling back toward $84,000 after initially jumping more than 2% and moving above $85,500.

August core PCE prices rose 0.2% from the previous month, coming in below the 0.3% forecast. The measure increased 3% from a year earlier, versus expectations for a 3.3% gain.

Bitcoin surged immediately after the data was released, briefly topping $85,500 as traders responded to the cooler inflation figures. The advance was almost entirely erased within two hours, leaving BTC close to its pre-release level near $84,000. The sharp move also forced leveraged short positions to close.

Stocks did not experience the same reversal. The Nasdaq climbed more than 1% to its session high, while U.S. government bond yields moved slightly lower.

Chicago PMI delivers another upside surprise

The Chicago PMI climbed to 58.8 in September from 47.1 in August, exceeding the 51.2 estimate.

Markets began giving back some of their initial PCE-related gains roughly 90 minutes after the inflation figures were published.

The 10-year Treasury yield was 1.2 basis points lower at 5.248%. Bitcoin was trading near $84,550, about $1,000 below its earlier high.

October Fed hike odds drop sharply

Traders had already scaled back expectations for an October rate increase following dovish remarks from New York Fed President John Williams.

CME FedWatch showed the probability of a rate hike at the Fed’s Oct. 28 meeting falling to 47.1%, down from 70% around two days earlier.

The Bureau of Labor Statistics also introduced a methodological change affecting the calculation of several PCE components. The adjustment may have contributed to the softer inflation result, according to market observers.

Softer PCE pushes Treasury yields lower

Bitcoin gained roughly 1% to $84,750 after the PCE report.

The 10-year Treasury yield dropped 4.2 basis points to 5.218%, while the two-year yield fell 2.1 basis points to 4.868%. U.S. stock futures advanced around 0.4%.

Headline PCE inflation increased 0.3% in August, compared with 0.1% in July and a 0.4% forecast. The annual rate remained at 3.4%, unchanged from July and below the 3.7% estimate.

Core PCE accelerated to a 0.2% monthly increase, while annual core inflation stood at 3%. Economists had forecast increases of 0.3% and 3.3%.

Private payroll growth exceeds expectations

ADP reported a 90,000 increase in U.S. private-sector employment for September, up from 36,000 in August and above the 70,000 forecast.

The official government jobs report for September was scheduled for Friday and was expected to provide additional insight into the labor market.

Bitfinex highlights real yields

Bitfinex analysts said elevated inflation-adjusted Treasury yields continue to present a headwind for bitcoin.

The 10-year real yield increased to 2.83% from 2.68% in the week ending Sept. 25. With real Treasury returns approaching 3%, investors face a higher opportunity cost when holding non-yielding assets such as bitcoin and gold.

Multicoin Capital invests in Grass

Multicoin Capital has invested in Grass through its hedge and venture funds. Grass describes its platform as a “read layer for machine intelligence.”

The company has shown commercial traction by generating significant revenue and reaching profitability after providing pretraining data to frontier AI labs through millions of residential connections.

Multicoin believes Grass could become infrastructure for autonomous AI agents by providing specialized search and content APIs capable of retrieving live information during inference.

S&P 500 breadth reaches lowest level since April

Just 25% of S&P 500 stocks were trading above their 50-day moving averages, the lowest share since April 2, according to the Kobeissi Letter.

The ratio has dropped from 70% in mid-August, showing how broadly participation in the equity market has weakened.

The cryptocurrency market, meanwhile, remained relatively resilient.

Bitcoin was near $83,700 before PCE

Bitcoin was trading around $83,700 before the inflation release, while gold hovered just below $4,200 an ounce.

Markets had expected core PCE to rise 0.3% month over month and 3.3% year over year. GDP growth was forecast at 1.5% quarter over quarter.

Traders were also pricing a 57% probability that the Federal Reserve would leave interest rates unchanged at its Oct. 28 meeting.

Standard Chartered sees ENA reaching $2

Standard Chartered initiated coverage of Ethena’s ENA token with a $2 end-2028 target, nearly 670% above its market price of about $0.26.

The bank said Ethena could benefit from growing demand for yield-bearing stablecoins and tokenized assets across DeFi and traditional financial markets. USDe reached a $10 billion market capitalization within its first nine months.

The report also cited Ethena’s buyback-and-burn mechanism and projected that USDe supply could reach $40 billion by 2028. Slower adoption and weaker real-world asset growth were highlighted as risks.

Gold remains locked around $4,200

Gold traded near $4,200, with XS.com head of business development Simon-Peter Massabni identifying the level as an important point for the metal.

Massabni said gold would need to post a daily or four-hour close above $4,200 before another upward move could be confirmed.

Federal Reserve policy remains a major short-term factor because gold does not generate interest. Higher rates can increase the relative opportunity cost of owning the metal instead of bonds or cash.

Massabni said a hotter-than-expected PCE reading could bring another round of short-term selling.

Markets will next focus on Friday’s jobs report. A weaker employment reading could reduce expectations for additional Fed rate hikes.

Bond market remains a key driver for crypto

Bitcoin had fallen 0.3% to roughly $83,700 ahead of the PCE release.

A hotter inflation reading would have strengthened expectations for additional rate increases and potentially added to the bond-market pressure seen during September. Brent crude was above $103 a barrel and had gained about 14% during the month, despite Middle East crude flows returning to pre-war levels.

Treasury markets stabilized after 30-year yields reached their highest level since 2002, while the dollar remained near its strongest level since July.

Ether slipped 0.7% to around $2,690. HYPE dropped almost 2%, while XRP and TRX each gained less than 1%, according to CoinDesk.

CryptoQuant estimated that bitcoin spot demand had contracted by about 170,000 BTC over the previous 30 days. Futures demand growth had declined 90% since Sept. 14.

Micron Technology was scheduled to release its earnings after the U.S. market close, with the results offering another test for AI-related stocks that had helped limit losses in the S&P 500 during the bond selloff.