Bitcoin’s Inflation-Fueled Jump to $85.5K Fades as Yields Stay High

Bitcoin’s brief move above $85,000 after a cooler-than-expected U.S. inflation reading failed to hold as Treasury yields remained close to their highest levels since 2002.

BTC was up 0.4% at just above $83,700 during Thursday’s Asian morning session. The cryptocurrency had climbed as high as $85,500 on Wednesday after the softer PCE inflation data, but the rally lost momentum as bond yields remained elevated.

Among major cryptocurrencies, HYPE was the strongest performer, rising 3% to around $89. DOGE advanced nearly 2% to just below $0.10. Ether, BNB, TRX and ZEC each gained less than 1%, while XRP was little changed at $1.50. SOL underperformed, falling almost 1% to below $119, according to CoinDesk data.

Softer PCE Data Boosts Rate-Cut Expectations

August’s personal consumption expenditures report showed inflation slowing more than economists had anticipated.

“August’s PCE report showed inflation cooling more than expected, with prices up 3.4% from a year earlier and 3.0% excluding food and energy, which has reduced the odds of another Federal Reserve rate increase in October and made December look like the more likely next move,” Dan Khus, chief analyst at LVRG Research, told CoinDesk in an email.

Khus said crypto initially responded positively to the report.

“Crypto markets took that as a relief signal, and bitcoin jumped back above $85,000 as bond yields slipped and investors became more willing to buy risk assets again,” he said.

Bond Yields Reverse Bitcoin’s Gains

The move higher in bitcoin did not last through the late U.S. trading session.

The 10-year Treasury yield was around 5.28%, close to Wednesday’s high. The 30-year yield held near 5.62% after reaching its highest level since 2002 during New York trading.

Oil prices declined, helping ease some of the pressure in the bond market, while the U.S. dollar strengthened.

The broader risk-on mood carried into Asian markets. Nasdaq 100 futures rose 0.8%, while S&P 500 futures gained 0.4%. Japan’s Nikkei climbed 2.7% and South Korea’s Kospi advanced 1.2% after Micron Technology issued an upbeat forecast that boosted semiconductor stocks.

Alphabet also rose 1.5% in extended trading as Google began rolling out Gemini 4 Argon, its latest flagship artificial intelligence model.

Bitcoin Needs Lower Yields to Sustain Rally

The latest price action highlights the influence of Treasury yields on bitcoin’s ability to maintain a move higher.

A softer inflation reading helped lift BTC above $85,000 temporarily, but that move was not enough to keep prices there while the 10-year Treasury yield remained near 5.3%.

For the rally to gain more staying power, a sustained decline in the 10-year yield would provide additional room for bitcoin to hold above the $85,000 level.