Bitcoin Falls as US PPI and Bond Yields Surge
Bitcoin fell below $77,000 around the US market open on September 10, tracking losses in US equities. Bitcoin declined about 2% as traders reacted to hotter-than-expected US inflation, rising oil prices and a sharp increase in Treasury yields.
US Producer Price Index inflation reached 5.4% year on year in August, slightly above expectations, while July’s figure was revised higher. The data increased expectations that the Federal Reserve could tighten policy. CME FedWatch showed the probability of a 25-basis-point rate hike at the September 16 meeting rising to 69.8%, from 61.2% a day earlier.
Oil prices also added to inflation concerns. WTI crude moved above $100 per barrel for the first time since May, while Brent crude exceeded $105 as Middle East tensions escalated.
The US 30-year Treasury yield reached 5.353%, its highest level since June 2007, despite a $6 billion Treasury buyback. The 10-year yield climbed to 4.924%, its highest level since November 2023. Higher yields increase borrowing costs and typically pressure risk assets, including Bitcoin.
Traders are now focused on the US Consumer Price Index report, due before the Federal Reserve’s rate decision. Further evidence of persistent inflation could increase selling pressure on Bitcoin, while a softer CPI reading may support a recovery.
Bearish
The immediate market impact is bearish for Bitcoin. The combination of a 5.4% annual rise in US PPI, upward revisions to prior data, higher oil prices and a 19-year high in the 30-year Treasury yield creates a difficult environment for risk assets. Rising inflation expectations can reduce the likelihood of monetary easing and increase the probability of higher-for-longer interest rates.
Bitcoin has historically reacted negatively when strong inflation data leads traders to price in tighter Federal Reserve policy. Similar episodes, including the 2022 rate-hike cycle and later inflation surprises, were associated with higher real yields, reduced liquidity and pressure on speculative assets. The rise in Treasury yields is particularly significant because it offers investors more attractive lower-risk returns while increasing the discount rate applied to Bitcoin and other growth-sensitive assets.
In the short term, traders may reduce leverage, sell into rallies and wait for the CPI report and the Federal Reserve decision. A hotter CPI reading could push Bitcoin below recent support near $77,000 and increase volatility. A softer CPI reading, falling yields or a reversal in oil prices could trigger a relief rally and short covering.
Over the longer term, persistent inflation and elevated borrowing costs would remain a headwind for crypto liquidity and institutional risk appetite. However, if inflation cools and yields stabilise, Bitcoin could recover as expectations for monetary easing return. The key indicators are US CPI, Treasury yields, Fed rate expectations, oil prices and spot-market flows.