Bitcoin rose to $85,500 on Wednesday following a softer-than-expected U.S. inflation report, but the gains faded as Treasury yields remained elevated. Bitcoin traded just above $83,700 on Thursday Asian morning hours, up 0.4% from the previous close.
The August PCE report showed inflation cooling more than expected, with prices up 3.4% year-over-year and 3.0% excluding food and energy. This softer reading reduced expectations for a Federal Reserve rate increase in October, with December appearing as the more likely next move for policy action.
The initial market reaction treated the inflation data as a relief signal, spurring crypto buyers to re-enter the market. However, persistent Treasury yields limited the advance. The 10-year yield traded around 5.28%, close to its Wednesday peak, while the 30-year yield steadied at 5.62% after hitting its highest level since 2002 during New York trading.
Among major cryptocurrencies, HYPE led gains with a 3% increase to about $89, while Dogecoin climbed nearly 2% to just under 10 cents. Ether, BNB, TRX, and ZEC each added less than 1%. Solana slipped nearly 1% to just under $119, while XRP remained flat at $1.50.
Broader market developments supported risk appetite. Nasdaq 100 futures climbed 0.8% and S&P 500 futures rose 0.4%. Japan's Nikkei jumped 2.7% and South Korea's Kospi rose 1.2% following Micron Technology's upbeat forecast for the chip sector. Oil declined, which helped pause the bond selloff, while the dollar strengthened.
Analysts noted that a sustained drop in the 10-year Treasury yield would be necessary to provide room for the next bitcoin rally to hold its gains.
