Bitcoin Hovers Below $80,000 Ahead of US Inflation Data as Fed Rate-Hike Fears Build

Bitcoin was trading below $80,000 as investors turned cautious ahead of key US inflation readings and weighed the possibility of another Federal Reserve interest-rate increase.

The Block reported on September 7 that Bitcoin changed hands at about $79,500. The cryptocurrency briefly rose above $82,000 last week, but lost momentum after stronger-than-expected US labor data. US nonfarm payrolls for August increased by 162,000, far exceeding the market forecast of 55,000, while the unemployment rate held at 4.1%.

The solid jobs report also raised the odds of further Fed tightening. According to CME FedWatch, the probability that the Fed will raise its benchmark rate by 25 basis points at its September 16 meeting climbed to about 60%. Rising US Treasury yields and a stronger dollar then added pressure to rate-sensitive assets, including Bitcoin.

Institutional money has continued to flow in, however. US spot Bitcoin exchange-traded funds recorded net inflows of $987 million last week, marking a third straight week of inflows. On-chain data also strengthened. The 30-day rate of change in Bitcoin's realized market capitalization turned positive on August 24 and rose to 0.88% by September 6. Over the same period, realized market capitalization increased by $9.36 billion to $1.068 trillion.

QCP Capital said recent swings in daily ETF flows appeared to reflect position adjustments ahead of major economic releases rather than clear directional bets. It set near-term resistance at $80,000 to $82,000 and support at $77,000 to $78,000.

Markets are now watching US producer price index and consumer price index data due this week. Higher-than-expected inflation could again bolster the case for another rate increase and add further downside pressure on Bitcoin.