Bitcoin celebrated a brief midweek rally as the asset broke above $85,500 on Wednesday, September 30, reacting to the August personal consumption expenditures (PCE) report, which showed US inflation running cooler than expected.
August core PCE rose 3.4% year-over-year, and just 3.0% when excluding food and energy components. These below-market inflation figures reduced the likelihood of the US central bank raising interest rates in October.
Dan Khus of LVRG Research highlighted the macroeconomic data as a catalyst for the buying action. “The crypto market took it as a relief signal, and Bitcoin jumped back above $85,000 as bond yields dipped,” Khus said.
A Bond Wall Since 2002
The $85,500 price was short-lived. Bitcoin retreated to trade around $83,700 during Thursday morning trading in Asia. The drag on prices originated in the debt market, where elevated bond yields continued to pressure crypto assets.
The US 10-year Treasury yield hovered tightly at 5.28%, near Wednesday’s highs. Heavier pressure came from the long end of the curve, with the 30-year yield settling at 5.62% to notch its highest level since 2002.
Market analysts cited one strict condition for the crypto rally to sustain: the US 10-year yield must consistently trend lower. As long as bond yields remain at 24-year highs, Bitcoin’s momentum will repeatedly run into a wall whenever it approaches $85,000.
Capital Shifts to Chip Stocks
Bitcoin’s pullback coincided with a shift in capital flows across traditional equities. As Wall Street reversed course, Asian equity futures advanced in the green. The Nasdaq 100 rose 0.8% and the S&P 500 added 0.4%.
Asian bourses joined the rally, absorbing fresh capital inflows. The Nikkei index jumped 2.7%, while the Kospi rose 1.2%. The primary catalyst behind both indices was Micron Technology’s upbeat business outlook, which prompted investors to aggressively buy chipmaker shares.
Alphabet shares also posted a 1.5% gain in extended trading. The buying in Google’s parent company followed its release of a new artificial intelligence model dubbed Gemini 4 Argon.
Capital flows today competed across multiple asset classes. For the crypto market, the rivals siphoning off liquidity extended beyond inflation headlines to absolute 5% bond yields and the euphoria sweeping Asia’s artificial intelligence sector. Reported by CoinDesk.
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Also read: US Bond Yields Head Toward Record 6% - Ironically, the Surge Strengthens Bitcoin’s Position
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
