Bitcoin held the $80,000 level even after the United States' September consumer price index (CPI) and producer price index (PPI) both came in above market expectations. CoinPost, a blockchain media outlet, reported on Oct. 18 that Bitbank analyst Yuya Hasegawa (하세가와 유야) sees a high chance bitcoin will continue to build a base around $80,000 next week.

Bitcoin's yen rate started the week around 13.25 million yen, then slid to about 13.00 million yen as oil prices rose and major U.S. stock indexes fell. Early on Oct. 13, it briefly fell below 13.00 million yen as long positions were liquidated, but later rebounded to around 13.25 million yen on bargain hunting. Ahead of the September U.S. CPI release, gains were capped at 13.30 million yen, or about $84,000, and trading stayed in a narrow range around 13.20 million yen.

The September U.S. CPI rose 3.7 percent from a year earlier, beating the market estimate of 3.6 percent. The September PPI, released on Oct. 15, was also strong, pushing bitcoin to a lower trough in the 12.50 million yen range. Despite the strong PPI, fed funds futures markets were leaning toward an expectation that the Federal Open Market Committee (FOMC) would hold rates in October, and bitcoin climbed back to around 13.00 million yen as U.S. stocks rebounded.

Hasegawa pointed out that short-term U.S. rates did not keep rising despite strong inflation data, and that fed funds futures markets reflect an October FOMC rate pause with about a 70 percent probability. He said expectations for a rate pause have been weakening gradually this week, and financial conditions are not clearly improving.

A key variable next week is supply and demand around $80,000. Open interest remains concentrated at the $80,000 strike even after the Oct. 16 options expiry, and support could continue at that level if dealers' positive gamma is maintained. If open interest shifts to other strikes after expiry, weakening support around $80,000, and expectations for a pause retreat further, bitcoin could again test the $80,000 level. In that case, the risk remains that the pullback could widen to around $75,000, as suggested last week.

Overall, bitcoin's base case is for it to build a bottom next week with $80,000 as a support level. The view is that a lack of factors to push prices sharply higher means it is likely to seek direction in a $80,000 to $85,000 range first.