Bitcoin Risks a Break Below $80,000 Before Midterms

Bitcoin is trading between $80,000 and $88,000 before the U.S. midterm elections after higher inflation and $859 million in spot Bitcoin ETF outflows increased the risk of a break below support. A sustained move below $80,000 could expose the cryptocurrency to a decline toward $78,000.

Consumer prices rose 3.7% in September from a year earlier, up from 3.4% in August. Producer prices increased 1.3% from the previous month, the largest monthly gain since March 2022 and more than most forecasts. Core producer prices, which exclude food and energy, rose 0.7%.

The data added uncertainty before the Federal Reserve’s Oct. 28 policy meeting. Futures briefly priced the chance of a rate increase at about 50% after the consumer-price report before shifting toward a hold. Estimates on Oct. 15 put the probability of a hike between 29% and 34%. The Fed raised its target interest-rate range to 3.75% to 4% on Sept. 16.

Bitcoin’s main support zone is between $80,000 and $81,500, according to Sygnum investment strategist Can-Luca Köymen and on-chain cost-basis data. Glassnode estimates that the average cost basis for Bitcoin held by U.S. spot ETFs is about $81,500. Bitcoin fell below that level on Oct. 8 and Oct. 13 but closed above it on both days.

The next resistance level is near $88,000, which Glassnode identifies as the average cost basis for investors who bought Bitcoin six to 12 months ago. The firm estimates the average cost basis of active investors at about $78,000 and has identified a large concentration of spot bids on Binance near $80,000.

“Options price roughly $80,000 to $87,000 over the coming month, and on-chain cost-basis data draws much the same box,” Köymen wrote in a note. He added that Bitcoin could remain in the range through the midterm elections unless a catalyst pushes it beyond those levels.

Leverage has declined in recent days. Futures open interest fell 6% over the past week, while broader crypto open interest increased 15%. Modeled liquidation levels near the current price fell more than 20% in one week. Long-term-holder realized losses remain about 85% below their Aug. 12 peak.

“Funding has cooled and recent long liquidations have already cleared much of the excess leverage, so a self-feeding sell-off is less likely unless $80,000 breaks cleanly,” Köymen wrote. Lewis Huang, an analyst at Bitget, wrote that a confirmed close below the support level could mark a breakdown from the current consolidation range and increase the risk of further near-term losses.

Spot ETF flows weakened after almost $3 billion of inflows between Sept. 21 and Oct. 6. ETF data showed net outflows of $859 million over the six sessions from Oct. 7 through Oct. 14, including $261.4 million on Oct. 14.

The next scheduled inflation release is the September personal consumption expenditures price index on Oct. 29, one day after the Fed’s decision. Energy accounted for more than 80% of the monthly increase in final-demand producer prices, while producer gasoline prices rose 20.3%. Gasoline contributed more than half of September’s consumer-price increase.

Köymen wrote that the range could hold if the Fed keeps rates unchanged, avoids a hawkish signal and ETF outflows stabilize. A move above $88,000 would require new demand to absorb selling from investors reaching break-even. A close below $79,960 would put $78,000 in focus. The midterm elections are scheduled for Nov. 3.