Bitcoin’s latest rally has hit its first serious test.
After briefly trading above $81,000, the cryptocurrency gave back roughly $3,000 within hours following a hotter-than-expected inflation report. It is now hovering around $78,000 as traders look ahead to a packed 48-hour window featuring macro data fallout, a $6.4 billion Bitcoin options expiry, Nvidia earnings, Federal Reserve Chair Kevin Warsh’s first major Jackson Hole speech, and a rate decision due three weeks later.
Hotter PCE and revised GDP data interrupted the rebound
The most closely watched data points this week arrived Wednesday morning.
July personal consumption expenditures, or PCE, the inflation gauge most closely followed by the Federal Reserve, rose 3.7% year over year, above the 3.6% market expectation. Core PCE matched forecasts at 3.3%. At the same time, the government’s second estimate for second-quarter GDP showed annualized growth of 1.5%, while consumer spending was revised higher from the initial reading.
PCE matters more than many other inflation indicators because it is the benchmark the Fed uses when discussing its 2% target, rather than the more widely cited CPI. A hotter reading gives policymakers less reason to cut rates, and GDP data showing resilient consumption weakens the case that the economy needs near-term support.
That combination weighed on Bitcoin on Wednesday. Expectations for higher rates lasting longer tend to lift the U.S. dollar and bond yields, both of which can pull capital away from non-yielding assets. Within hours of the release, Bitcoin fell from above $81,000 to below $78,000.
$6.4 billion in Bitcoin options expire Friday
About $6.4 billion in Bitcoin options contracts are set to expire on Deribit this Friday, the same day as the Jackson Hole keynote.
Traders are closely watching the so-called max pain level, the strike price at which the largest number of contracts would expire worthless. That level is currently near $78,000, below Bitcoin’s current spot price.
The size of the expiry matters because institutions that sold those options often have to buy or sell spot Bitcoin as prices move in order to hedge their exposure. With a $6.4 billion book, hedging flows alone can move the market even without a separate news trigger. The wider the gap between spot and max pain, the more aggressive that hedging activity can become as settlement approaches.
If Bitcoin remains well above max pain into Friday, market makers who sold call options may need to keep buying the underlying asset to maintain their hedge, adding upward pressure. If the price is pulled toward the $68,000 range, that dynamic reverses. At this scale, position unwinds can amplify volatility in either direction.
Nvidia earnings are a read on AI risk appetite
Nvidia is scheduled to report second-quarter results after the close on Wednesday, with Wall Street expecting about $92.3 billion in revenue.
The company matters to crypto traders because it is seen as one of the clearest gauges of how much money is still flowing into AI infrastructure. According to the report, Bitcoin’s advance this year has often traded alongside sentiment in AI stocks rather than on a fully independent track.
When investors are confident in big-tech earnings, they often add exposure across the broader risk curve, and crypto is part of that trade. At the same time, AI and tech shares, while still helping drive the S&P 500, sit in a risk-heavy corner of the market that some defensive traders still avoid.
A strong earnings beat paired with confident guidance could bring more capital into risk assets broadly and extend Wednesday’s dip-buying into Bitcoin. A weaker-than-expected report, or cautious guidance on AI spending, could pull both tech shares and crypto lower together. The report said the two have moved in close sync this year.
Kevin Warsh’s first Jackson Hole speech is now in focus
Kevin Warsh, who became Federal Reserve chair in May, is set to deliver his first keynote speech at the Jackson Hole symposium on Friday. The appearance comes three weeks before the Sept. 16 rate decision, when policymakers will also release updated economic projections, according to Decrypt.
For markets, this is the first chance to hear how the new chair talks about policy in a major public setting, rather than inferring his stance only from the data. Traders will parse both wording and tone. Any comment on inflation risk or labor-market weakness could shift rate expectations for weeks.
A dovish tone that downplays the hotter PCE print and puts more weight on softer labor data could pressure yields and the dollar, the same combination that helped fuel Bitcoin’s rally earlier this month. A hawkish tone centered on inflation risk could send Wednesday’s pullback into the weekend.
Rate pricing in futures has already swung sharply over the past month. CME FedWatch currently shows a 38.4% probability of a September rate hike, down from 82% a month ago, while 61.6% of pricing points to no change.
ETF flows remain a live signal of institutional demand
U.S. spot Bitcoin and Ether ETFs took in $2.6 billion last week, their strongest weekly showing since October 2025. The report added that most of the increase came from rising prices in existing holdings rather than fresh net inflows.
ETF flows are viewed as one of the cleanest real-time reads on institutional demand because they stand apart from retail trading and derivatives speculation. Exchange supply is another indicator being watched at the same time, since a shrinking pool of coins available for sale can make prices more sensitive to buy and sell pressure.
That supply tightness helped drive a short squeeze last week. Traders betting on lower prices were forced to cover, wiping out about $3 billion in short positions in a single day.
If ETF inflows continue and exchange supply keeps shrinking, even relatively modest buying could push prices higher through the same mechanism. If flows turn into sustained outflows, that support could fade just as quickly.