Key facts
- Bitcoin's price fell from over $81,000 to below $78,000 following a hotter-than-expected PCE inflation report.
- The PCE inflation gauge, closely watched by the Federal Reserve, rose 3.7% annually.
- A $6.4 billion Bitcoin options expiry is scheduled for Friday, coinciding with the Jackson Hole symposium.
- Nvidia's earnings report is expected Wednesday, which could influence broader risk asset sentiment.
- New Fed Chair Kevin Warsh will deliver his first major speech at Jackson Hole on Friday.
- US spot Bitcoin and Ethereum ETFs experienced their best week of inflows since October 2025, totaling $2.6 billion.
Bitcoin is currently trading near $78,000, having been pushed back from an intraday high of $81,000 by a stronger-than-expected PCE inflation report. This economic data, coupled with a significant $6.4 billion Bitcoin options expiry and Nvidia's upcoming earnings, creates a complex trading environment.
The July PCE report indicated annual inflation at 3.7%, exceeding the 3.6% forecast, while core PCE held steady at 3.3%. The second quarter GDP was revised to 1.5% annual growth, with consumer spending showing resilience. These figures suggest less room for the Federal Reserve to cut interest rates, potentially leading to a 'higher-for-longer' rate environment.
This scenario typically strengthens the U.S. dollar and increases bond yields, which can divert capital away from non-yielding assets like Bitcoin. The combination of these factors contributed to Bitcoin's rapid decline of approximately $3,000 within hours of the data release.
Adding to the market's complexity is a substantial $6.4 billion Bitcoin options expiry on Deribit scheduled for Friday. The 'max pain' price, where the largest number of contracts expire worthless, is near $78,000. Large expiries can influence market movements as option sellers hedge their positions by trading actual Bitcoin.
Nvidia's earnings report, due after Wednesday's market close, is also a key focus. As a bellwether for AI infrastructure spending, strong results could boost overall risk appetite, potentially benefiting Bitcoin. Conversely, a miss or cautious guidance might drag down tech stocks and cryptocurrencies, given their recent correlation.
Furthermore, new Fed Chair Kevin Warsh's first keynote address at the Jackson Hole symposium on Friday will be closely scrutinized. His remarks, three weeks before the Fed's next rate decision, could significantly shift rate expectations based on his tone regarding inflation and economic growth.
In terms of institutional demand, U.S. spot Bitcoin and Ethereum ETFs attracted $2.6 billion in new investments last week, marking their best performance since October 2025. This inflow, alongside shrinking exchange supply, contributed to a short squeeze that liquidated roughly $3 billion in bearish bets.