[DigitalToday reporter Jinju Hong] Bitcoin on Sept. 9 (local time) gave up all of its overnight gains and returned to flat levels after U.S. stocks opened. Markets appear to be growing more cautious ahead of the U.S. producer price index (PPI) and consumer price index (CPI) due this week.

According to blockchain outlet The Defiant, bitcoin rose during Asian and European trading hours but surrendered all of its early gains in New York trading. Bitcoin at one point slipped back near the previous session's close and was down 0.1 percent from 24 hours earlier at $78,591.04, CoinGecko data showed. The intraday high was $79,701.36 and the low was $78,308.42.

Major altcoins also weakened. Ether fell 0.2 percent, while XRP and Solana slid 1.2 percent and 1.3 percent, respectively. BNB dropped 2.1 percent. Total cryptocurrency market capitalisation rose 0.04 percent over 24 hours to $2.79 trillion, while bitcoin dominance stood at 56.5 percent.

Market participants are focusing on U.S. inflation data. The PPI and CPI are the last major inflation indicators before the Federal Open Market Committee (FOMC) meeting. Polymarket is pricing a 55 percent chance of a 0.25 percentage point rate hike at the Sept. 15 to 16 FOMC meeting and a 45 percent chance of a hold. On Aug. 24, expectations favoured a hold, but the probability of a hike has risen recently.

Laser Digital's derivatives trading desk said the spot market is moving in a narrow range and the broader market is in a cautious mode ahead of the inflation data releases. It added that because the PPI is released before the CPI this time, it could grow in importance as the first inflation signal ahead of the FOMC, unlike its usual market influence.

External market conditions also weighed on risk assets. Brent crude climbed to as high as $100.74 a barrel, rising above the $100 mark for the first time since July 23. Gold futures rose and U.S. stock index futures weakened. Yields on U.S. 10-year and 30-year Treasuries also stayed elevated.

Inflows into spot bitcoin ETFs also slowed. U.S. spot bitcoin ETFs posted net outflows of $46.6 million on Sept. 8, the first withdrawal since Sept. 1. Over the previous three trading sessions, there were net inflows totalling $1.01 billion, including $730.8 million on Sept. 3 alone.

Zcash, by contrast, drew the market's attention. Zcash rose 7.2 percent over 24 hours to $1,284.42, with gains of 56.3 percent over the past seven days and 152.3 percent over 30 days. Its market capitalisation was estimated at $21.74 billion. Zcash was the only token among the top 20 to rise more than 2 percent.

Zcash's rise appears to have been influenced by capital from Digital Currency Group and ETF demand. A Zcash ETF said in a recent filing that Digital Currency Group acquired trust units worth about $100 million and contributed 85,705.32563297 ZEC in kind in return. The transaction was structured not as an on-exchange purchase but as a contribution of existing ZEC to the fund in exchange for ETF units.

The Zcash ETF said assets under management surpassed $500 million just two weeks after listing, and cumulative net inflows since its conversion to an exchange-traded product also exceeded $70 million. Options trading in ZCSH also began on NYSE Arca.

Market sentiment has not yet contracted sharply. The Crypto Fear & Greed Index fell to 66 from 69 a day earlier, but it has remained above 60 since Aug. 29. Laser Digital said call option preference is strengthening in the options market, adding that unlike short-term weakness in the spot market, investors' expectations for a rise have not been fully broken.

The direction of the cryptocurrency market in the short term is increasingly likely to be determined by inflation data this week and the next FOMC meeting. With bitcoin slipping again after nearing a break above $80,000, the market is watching inflation, interest rates and moves in commodity prices at the same time.