Bitcoin has retraced to around $79,000, updating its low near $77,700 yesterday. Ethereum has also stabilized after dipping to $2,430 and is now trading at $2,489, aiming for a return to $2,500.

The scenario discussed before the publication has unfolded almost to the worst of the two options. The PCE index for July increased by 0.2% month-on-month against an expected 0.1%, while year-on-year inflation accelerated to 3.7% against a forecast of 3.6%. However, the core figure, most important for the Federal Reserve, came in exactly at the expected level of 3.3%. The U.S. GDP for the second quarter confirmed the preliminary estimate of 1.5% year-on-year growth.

Bitcoin reacted with a sharp reversal. The asset, which was trading earlier in the session at $81,000, plummeted below $78,000 immediately after the report was published, erasing a significant portion of the daily gain. The movement was particularly painful given that the market was already entering the data day with caution; on August 25, the total market capitalization of cryptocurrencies dropped by 1.6% in anticipation of the publication. The reaction mechanics are standard for this cycle: higher-than-expected inflation raises concerns about the limited scope for the Fed to ease policy, drives up Treasury yields, and strengthens the dollar, reducing investors' appetite for volatile assets like Bitcoin precisely at the moment when the market was building positions in anticipation of continued rate cuts.

Cryptocurrency stocks traded on traditional exchanges also suffered. Strategy lost 4.58%, dropping to around $87.30; MARA fell by 4.69%; Circle's stock plummeted by 5.13%; and Bitmine retreated by 1.17%. Notably, this reaction mirrors a pattern seen a month prior, where Bitcoin struggled to hold its positions even after a significantly softer-than-expected CPI report in July, indicating the overall fragility of the current rally regardless of the specific macroeconomic surprise.

Regarding short-term trading, the strategy and conditions are described below.

Bitcoin

Buying Scenario

Scenario No. 1: I plan to buy Bitcoin today when the entry point reaches around $79,000 with the aim of rising to the level of $79,600. Around $79,600, I will exit the buy positions and sell immediately on the rebound. Before buying on the breakout, ensure that the 50-day moving average is below the current price and the Awesome indicator is above zero.

Scenario No. 2: Bitcoin can be bought at the lower boundary of $78,600 if there is no market reaction to its breakout in the opposite direction to levels of $79,000 and $79,600.

Selling Scenario

Scenario No. 1: I plan to sell Bitcoin today when the entry point reaches around $78,600 with the aim of falling to the level of $78,100. Around $78,100, I will exit the sell positions and buy immediately on the rebound. Before selling on the breakout, ensure that the 50-day moving average is above the current price and the Awesome indicator is below zero.

Scenario No. 2: Bitcoin can be sold from the upper boundary of $79,000 if there is no market reaction to its breakout in the opposite direction to levels of $78,600 and $78,100.

Ethereum

Buying Scenario

Scenario No. 1: I plan to buy Ethereum today when the entry point reaches around $2,502 with the aim of rising to the level of $2,527. Around $2,527, I will exit the buy positions and sell immediately on the rebound. Before buying on the breakout, ensure that the 50-day moving average is below the current price and the Awesome indicator is above zero.

Scenario No. 2: Ethereum can be bought at the lower boundary of $2,483 if there is no market reaction to its breakout in the opposite direction to levels of $2,502 and $2,527.

Selling Scenario

Scenario No. 1: I plan to sell Ethereum today when the entry point reaches around $2,483 with the aim of falling to the level of $2,466. Around $2,466, I will exit the sell positions and buy immediately on the rebound. Before selling on the breakout, ensure that the 50-day moving average is above the current price and the Awesome indicator is below zero.

Scenario No. 2: Ethereum can be sold from the upper boundary of $2,502 if there is no market reaction to its breakout in the opposite direction to levels of $2,483 and $2,466.