Bitcoin reclaimed the $86,000 level, buoyed by cooling U.S. inflation data and seasonal strength expectations for October. The August PCE price index came in below forecasts, easing rate-hike concerns and sending the probability of an October rate increase plunging from 68% to 24%. Strategy, the world's largest corporate Bitcoin holder, disclosed an additional purchase of 1,665 BTC, while spot Bitcoin ETFs saw net inflows exceeding $100 million, further supporting investor sentiment. The SEC also signaled a market-friendly stance by proposing new crypto custody rules. Near-term direction, however, will likely hinge on shifts in Fed rate expectations following the release of U.S. employment data.
The cryptocurrency market extended its upward momentum into October. Bitcoin reclaimed the $86,000 level as cooling U.S. inflation data converged with seasonal strength expectations, while news that Strategy—the world's largest corporate Bitcoin holder—had resumed purchases further lifted investor sentiment.
According to South Korean crypto exchange Upbit on October 3, Bitcoin was trading around 116 million won (approximately $86,000) as of 3 p.m. the previous day. That marks a gain of roughly 1.8% from the same time last week and an 8.9% increase compared with early last month. CoinMarketCap data showed Bitcoin trading at $86,011, up 2.13% over the prior 24 hours, pushing back above the $86,000 threshold.
The immediate catalyst for the rally was U.S. inflation data. The August Personal Consumption Expenditures (PCE) price index—the Federal Reserve's preferred inflation gauge—rose 3.4% year-over-year, coming in below market expectations. This eased concerns about additional rate hikes, with the probability of an October rate increase plunging from 68% a week earlier to 24%.
"The August PCE reading came in below expectations, sharply lowering the odds of an October rate hike and supporting investor sentiment," said Kim Ji-won, an analyst at KB Securities.
Seasonal strength in October—the so-called "Uptober" effect—is also fueling optimism. Since 2017, Bitcoin has posted an average October return of 16.75%, markedly higher than any other month.
"Investor sentiment recovered late last month thanks to falling oil prices and the below-consensus U.S. August PCE reading," said Shim Soo-bin, an analyst at Kiwoom Securities. "Strategy's resumption of Bitcoin purchases also appears to have had a positive impact on sentiment."
Strategy disclosed in a U.S. Securities and Exchange Commission (SEC) filing that it purchased 1,665 Bitcoin between September 21 and 27 for a total of $142.7 million, at an average price of $85,681 per coin.
Institutional fund flows are also underpinning the market. U.S. spot Bitcoin ETFs recorded net inflows of $102.67 million on October 1. By contrast, spot Ethereum ETFs saw net outflows of $55.37 million on the same day.
The altcoin ETF market was mixed across individual products. XRP ETFs attracted $4.07 million in net inflows, HYPE $4.96 million, LINK $2.62 million, NEAR $8.08 million, AVAX $267,840, and HBAR $2.1 million. Meanwhile, SOL ETFs saw $5.91 million in outflows, and ZEC ETFs shed $28.26 million. BNB, TRX, DOGE, LTC, and DOT ETFs recorded no net flows.
The SEC's regulatory moves are also being interpreted as market-friendly. On October 1, the SEC proposed new rules governing crypto custody procedures for investment advisers and regulated funds. The proposal aims to establish clear, separate standards for digital asset custody, including provisions that would allow investors to self-custody crypto assets under certain conditions and permit state-chartered trust companies to offer custody services.
SEC Chairman Paul Atkins said the proposal would create a "clearer custody framework" for investment advisers and funds. He noted that current regulations were designed around traditional assets and have failed to keep pace with the rapidly evolving crypto industry.
Among major altcoins, Ethereum traded at $2,724, up 1.4% from the prior week, while Ripple edged up 0.1% to $1.51 and Tron rose 0.4%. Solana slipped 0.1% week-over-week but gained 2.18% over 24 hours to $121.93. LayerZero stood out among altcoins with a 10.42% surge, while Quant tumbled 13.84%.
Total cryptocurrency market capitalization reached $2.92 trillion, up 1.22% over the prior 24 hours.
Investor sentiment remains in greed territory. CoinMarketCap's "CMC Crypto Fear & Greed Index" stood at 70 as of the previous day, indicating greed—similar to the prior week's reading of 73. The index ranges from 0, signaling extreme fear, to 100, indicating extreme optimism.
In the near term, market attention is focused on U.S. employment data. The U.S. Bureau of Labor Statistics is scheduled to release the September jobs report later today. Employment figures directly influence Fed monetary policy expectations and could set the direction for risk assets broadly, including Bitcoin. A strong jobs report could shift rate expectations, while a weak reading could trigger a different price trajectory.
"After the sharp rally following the SEC's innovation exemption announcement, the market has been consolidating," Kim added. "Bitcoin has been trading in a narrow range between $82,500 and $85,500."
