Bitcoin Traders Ease Off Before Inflation Data the Fed Is Watching

Bitcoin has dropped below 78,000 dollars again, erasing some of its gains from earlier in the week. As US inflation figures approach, options traders are also beginning to reduce their bullish exposure.

Options traders become more cautious

After the decline recorded last week, bitcoin had managed to regain some height before losing ground again. It now trades around 78,000 dollars, about 4% below its recent peak above 81,000 dollars.

Options markets also show some signs of caution. According to the trading terminal OrderX, the “call skew” continues to ease. In other words, traders are less willing to pay a premium to bet on further bitcoin gains.

This shift occurs as several factors complicate the outlook for risky assets. Oil remains high, US bond yields are under pressure, and expectations around the Fed’s monetary policy are evolving rapidly.

The US central bank is set to announce its rate decision on September 16, following its meetings on September 15 and 16. Inflation figures published beforehand could therefore play a significant role in market expectations.

The PPI before the CPI

The first event will be Thursday’s release of the Producer Price Index (PPI) by the Bureau of Labor Statistics. The consensus cited by CoinDesk expects a 0.4% increase month-over-month in August, after no change in July.

Year-over-year, the PPI could rise from 4.7% to 5.3%. The figure is closely watched because an acceleration in inflation could complicate the monetary easing scenario expected by some market participants.

The CPI, published on Friday, will be even more important. Inflation below expectations could give some breathing room to bitcoin and other risky assets. Conversely, an upside surprise could support the dollar and bond yields, two factors generally unfavorable to bitcoin.

However, the expected year-over-year PPI increase should be put into perspective. Part of the rise is due to a base effect linked to last year’s figures. The 5.3% does not necessarily indicate a new price surge of the same magnitude.

Bitcoin remains stuck between 76,000 and 82,000 dollars

In the short term, technical levels remain fairly clear. For the past week, bitcoin has mainly traded between 76,000 and 82,000 dollars.

A sustained move above 82,000 dollars could revive the bullish momentum seen in August. Conversely, a break below 76,000 dollars would further weaken the short-term trend.

Everything will now depend on inflation figures. The market will especially need to determine whether they reinforce expectations regarding the Fed’s next decision.

In this context, flows into spot Bitcoin ETFs will also be closely watched. If they continue to absorb part of the available supply, they could limit the extent of any potential pullback.