Bitcoin trapped below $86K as PCE changes cloud inflation reading

Bitcoin erased its post-PCE gains as analysts cautioned that methodology changes complicated the lower-than-expected inflation reading. Bitcoin (BTC) held above $83,000 on Thursday after giving back gains following lower-than-expected US inflation data. Data from Coinbase showed BTC/USD flat on the day after a brief bout of volatility ahead of September’s monthly and third-quarter close. BTC/USD one-hour chart. Source: Cointelegraph/TradingView Bitcoin began Q4, historically its strongest quarter, at around $83,550, after posting third-quarter gains of 42.7%, according to data from >CoinGlass — its best Q3 performance since 2017. BTC/USD quarterly returns (screenshot). Source: CoinGlass CoinGlass’s liquidation heatmap showed potential liquidation clusters above and below Bitcoin’s market price. On Thursday, a new $60 million cluster of estimated liquidation exposure appeared near $83,000, close to key support at $82,500 — a level that analysis marked as critical for Bitcoin’s broader rebound from June lows. BTC liquidation heatmap. Source: CoinGlass Bitcoin’s latest rally stalled Wednesday, with BTC/USD reversing at $85,600. The advance followed a lower-than-expected US inflation reading. The Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, came in at 3.4% year-on-year in August, versus expectations of 3.7%. “Excluding food and energy, the PCE price index increased 3.0 percent from one year ago,” an >official release from the Bureau of Economic Analysis (BEA) stated, referring to core PCE. US PCE index. Source: BEA The release also incorporated methodology changes affecting portfolio management and investment advice, computer software and accessories, and legal services. “We estimate the methodology alone could reduce Core PCE inflation by up to 20 basis points,” market commentary publication The Kobeissi Letter >wrote on X, noting that July headline and core PCE inflation had also been revised downward by 30 basis points. Kobeissi forecast that markets would “heavily discount” the August reading. The S&P 500 closed Wednesday down 0.25% at 7,651 points, while the Dow Jones Industrial Average shed 0.86%. Data from >CME FedWatch Tool showed that markets put the probability of a quarter-percentage-point rate increase at the Fed’s October meeting at around 37% on Wed