Bitcoin holds near $80,000 despite renewed Fed rate hike fears as CPI test looms

Bitcoin was trading just below $80,000 on Monday after giving back some of its gains from last week.

The largest cryptocurrency by market capitalization was changing hands at around $79,500, according to The Block's bitcoin price page. It had climbed above $82,000 at one point last week before Friday's U.S. jobs report, which showed 162,000 jobs were added in August against expectations of 55,000. The unemployment rate was unchanged at 4.1%.

Following the report, the implied probability of a 25 bps Federal Reserve rate hike on Sept. 16 rose to around 60%, according to CME's FedWatch tool. Treasury yields and the U.S. dollar rose following the data, while bitcoin and other rate-sensitive assets came under pressure.

"The crypto market continues to display exceptional resilience despite having been presented with plenty of reasons to correct," LMAX Group Market Strategist Joel Kruger told The Block. "Bitcoin is holding near $80,000 following an aggressive August rally that pushed momentum into overbought territory."

Kruger also pointed to higher Treasury yields and rising oil prices following the latest escalation between the U.S. and Iran. "What stands out is that crypto has absorbed these headwinds without suffering meaningful technical damage," he said.

Bitcoin ETF inflows extend for third week

U.S. spot bitcoin exchange-traded funds pulled in $987 million last week, extending their positive flows to three straight weeks.

However, analysts at QCP Capital said the volatility in day-to-day flows looked more like traders adjusting positions and waiting for clarity ahead of this week's data than firm directional positioning, putting local resistance at $80,000 to $82,000 and support at $77,000 to $78,000.

Onchain data also showed realized capitalization increasing through bitcoin's recent price swings. The 30-day change in realized capitalization turned positive on Aug. 24 after spending 87 days in negative territory, according to CryptoQuant analyst Axel Adler Jr. The measure had risen to 0.88% by Sept. 6, with realized capitalization increasing by $9.36 billion over the 30-day period to $1.068 trillion.

A rising realized cap indicates that bitcoin is changing hands at higher prices, which Adler said supports the recovery while the price holds around $80,000.

Traders' attention now shifts to U.S. producer price data, scheduled for Thursday, followed by August CPI on Friday, the final major inflation readings before the Fed's Sept. 16 meeting. Headline CPI is expected to stay at 3.4% year over year, according to Capital.com Senior Financial Market Analyst Kyle Rodda, with core CPI seen falling to 2.4%.

Rodda said the core reading could provide enough evidence of disinflation for the Fed to hold rates, while a higher-than-expected reading could put a rate hike back in play.