Bitcoin briefly surged above $85,500 on Thursday after US inflation figures came in softer than expected, before giving back much of the move as Treasury yields refused to fall.
The world’s largest cryptocurrency jumped on news that the August personal consumption expenditures index rose just 3.4 percent against expectations of 3.7 percent. Core PCE, the Federal Reserve’s preferred inflation gauge, cooled to 3.0 percent versus forecasts of 3.3 percent, hitting a six month low.
The data eased fears of another Federal Reserve rate hike and sparked a rapid squeeze in crypto markets. Around $75 million in short positions were liquidated within a single hour as the price punched through $85,000. Bitcoin ETFs also enjoyed a strong session, pulling in a net $53.48 million in a single day, equivalent to about 628 BTC.
WHY THE RALLY RAN OUT OF STEAM
The pop proved short lived. Persistently high US bond yields acted as a brake on risk assets, with the 10 year Treasury yield hovering near 5.3 percent and the 30 year close to its highest level since 2002. With borrowing costs stuck at punishing levels, crypto’s gains unwound and bitcoin drifted back to trade just above $83,700.
Market watchers said the move showed how tightly bitcoin remains lashed to macroeconomic data. Each inflation print now acts as a trigger for violent two way moves, and this one was no exception.
BITCOIN IN POUNDS
For UK holders, the move translated to a bitcoin price of roughly £63,247, up about 0.4 percent over the previous 24 hours. The broader crypto market cap held steady near $2.96 trillion, with bitcoin dominance edging up to 56.8 percent.
Sentiment gauges stayed firmly upbeat. The crypto fear and greed index sat at 71, well inside greed territory, even as traders paused for breath after the rollercoaster session.
WHAT COMES NEXT
Attention now turns to whether ETF demand can carry the recovery further. Traders on prediction markets were still betting on bitcoin holding above $85,000, but the bond market remains the gatekeeper. Until yields start moving lower, every rally may face the same ceiling.
