Bitcoin's recent climb to $85,500 was short-lived as bond yields continued to hover at elevated levels, causing the cryptocurrency to settle just above $83,700.
A cooler-than-expected PCE report sent bitcoin briefly above $85,000 on Wednesday. Treasury yields held near their highest since 2002 and the gains drained away.
On Thursday morning in Asia, Bitcoin experienced a slight increase of 0.4%, reaching just over $83,700. The cryptocurrency had initially surged to $85,500 on Wednesday, fueled by a softer-than-anticipated U.S. inflation report. However, the upward momentum dissipated as Treasury yields remained near their highest levels since 2002.
Among major cryptocurrencies, HYPE led the pack with a 3% rise to approximately $89, while Dogecoin saw a nearly 2% increase to just under 10 cents. Other cryptocurrencies like Ether, BNB, TRX, and ZEC each recorded gains of less than 1%, whereas XRP remained steady at $1.50. Solana was the only major cryptocurrency to decline, slipping nearly 1% to just below $119, based on data from CoinDesk.
Dan Khus, chief analyst at LVRG Research, noted in an email to CoinDesk that the PCE report for August indicated a more significant cooling of inflation than expected, with prices rising by 3.4% year-over-year and 3.0% when excluding food and energy. This development has diminished the likelihood of another Federal Reserve rate hike in October, making December appear to be a more probable timeframe for any future increases.
Khus added that the crypto market interpreted this news positively, leading to Bitcoin's rebound above $85,000 as bond yields dipped, prompting investors to feel more comfortable buying riskier assets.
However, late trading on Wall Street reversed the earlier gains. The 10-year Treasury yield was around 5.28%, close to its peak from Wednesday, while the 30-year yield stabilized at 5.62%, after reaching its highest point since 2002 during the New York trading session. A decline in oil prices helped to halt the bond selloff, and the U.S. dollar strengthened.
The positive sentiment from technology stocks carried over into Asia, with Nasdaq 100 futures rising by 0.8% and S&P 500 futures increasing by 0.4%. Japan's Nikkei index surged by 2.7%, and South Korea's Kospi gained 1.2%, buoyed by an optimistic forecast from Micron Technology that boosted chip stocks.
In extended trading, Alphabet saw a 1.5% increase as Google began rolling out its new AI model, Gemini 4 Argon.
Despite the favorable inflation data, Bitcoin could not maintain its position above $85,000, primarily due to the 10-year yield remaining close to 5.3%. A sustained drop in bond yields is seen as necessary for the next rally to take hold.