Bitcoin Rally Fades as High Bond Yields Cap Gains
Bitcoin briefly climbed above $85,000, reaching about $85,500, after August US PCE inflation came in below expectations. Core PCE rose 0.2% month on month and 3.0% year on year, below the 3.3% forecast, while headline PCE increased 0.3% month on month and 3.4% year on year. The softer inflation data reduced expectations of another Federal Reserve rate hike in October and strengthened bets on a December rate cut. However, the Bitcoin rally quickly faded as Treasury yields stayed high. Bitcoin later traded near $83,700, up about 0.4% over 24 hours. The US 10-year Treasury yield remained near 5.28%, while the 30-year yield reached 5.62%, its highest level since 2002. Elevated bond yields are supporting safer assets and limiting liquidity flows into Bitcoin and other cryptocurrencies. A sustained decline in real yields may be needed for Bitcoin to resume its advance. Traders should monitor Treasury yields, the US dollar and oil prices. If yields remain elevated, Bitcoin could continue consolidating between $83,000 and $85,000. HYPE and DOGE gained, while SOL declined slightly and other major tokens posted mixed moves.
Neutral
The softer PCE inflation report is mildly supportive for Bitcoin because it reduces expectations of another Federal Reserve rate hike and increases the possibility of a December rate cut. Bitcoin initially responded by rising above $85,000. However, the reaction was not sustained. The 10-year Treasury yield remained near 5.28%, and the 30-year yield reached a multi-decade high, keeping financial conditions restrictive and limiting demand for risk assets. In the short term, elevated yields could encourage traders to take profits and keep Bitcoin range-bound between $83,000 and $85,000. A sustained fall in real yields, together with a weaker dollar and improved liquidity, would provide a stronger basis for a renewed Bitcoin advance. Until those conditions emerge, the conflicting signals from softer inflation and high bond yields support a neutral view rather than a clear bullish or bearish trend.