Bitcoin faces renewed downward pressure as hotter-than-expected US producer inflation and surging Treasury yields force a hawkish repricing of Federal Reserve interest rate expectations.
Hot US PPI data lifts rate hike odds and Treasury yields near 5%, pressuring risk assets like Bitcoin below $77,000.
Bitcoin dropped below $77,000 as August producer inflation accelerated to 5.4%, prompting traders to increase the probability of a September Federal Reserve rate hike to 70%. The selloff in risk assets coincides with a surge in Treasury yields, with the 10-year note nearing the critical 5% threshold despite aggressive Treasury buyback efforts.
Higher producer inflation suggests the Federal Reserve may maintain a hawkish stance, leading to higher interest rates and Treasury yields. This environment increases the appeal of government debt while reducing investor appetite for risk assets like Bitcoin.
No. Despite the Treasury purchasing $5.2 billion in long-dated debt, yields have continued to climb, suggesting that broader macroeconomic factors like fiscal deficits and sticky inflation are currently outweighing official market interventions.