Bitcoin was hovering below $84,000 on Wednesday as investors awaited key inflation data due later in the day.
The flagship cryptocurrency traded broadly flat at $83,390. Markets are looking to the latest U.S. consumer price inflation print, which will set the tone for the Federal Reserve's next interest-rate decision on Oct. 28. However, it is unlikely to prompt the Fed to hike rates again, following a quarter-point hike in September.
Money markets are pricing in a high 78% probability of unchanged Fed interest rates this month, according to LSEG.
A stronger-than-expected inflation reading could pressure bitcoin as expectations for higher U.S. interest rates would gain traction, Zaye Capital Markets' Naeem Aslam said in a note. Bitcoin's current gains could be temporary, he said. "Bitcoin's recovery reflects improving short-term risk appetite rather than confirmation of a sustained bullish reversal," he said, adding that institutional demand "remains uncertain."
"The rebound lacks strong institutional support," Dat Tong, a strategist at multiasset broker Exness, said in a note. "Spot Bitcoin ETFs recorded $65 million in net outflows on Monday, taking October flows to negative $451 million." Demand has been an issue for bitcoin on both the retail and institutional sides, analysts said, exaggerating price movements due to the low volumes being traded but providing little lasting momentum for bitcoin in either direction.
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