Bitcoin Surges to $86K as Fed Rate Hold Odds Rise

Bitcoin's price surged to $86,757 on Friday, marking a significant increase of 3% over the past 24 hours and 2% for the week. This move follows the release of the August core PCE data, which came in at 3.0%, lower than the expected 3.3%. As a result, the odds have shifted towards the Federal Reserve holding interest rates steady at its October 28 meeting.

According to CME's FedWatch tool, futures now put a hold at 74%, up from 35.8% last week. This indicates that market expectations have changed in favor of a rate hold, rather than a hike. Analysts are attributing this shift to the recent inflation data and the labor market's performance.

Nexo analyst Iliya Kalchev noted that high Treasury yields had previously been capping Bitcoin's price, but with the current repricing, the market is now positioning for continuation. Options show protection at $80,000 and below, while calls are placed at $89,000 to $92,000.

October and November have historically been favorable months for Bitcoin, known as 'Uptober'. Traders anticipate that if positive figures emerge and the Fed holds off on a rate hike, the price could surge. However, some analysts remain cautious, warning that institutions entering at these price levels may indicate less upside momentum.