Bitcoin: Inflation pop fades, yields weigh
Bitcoin falls back from $85,500 after the PCE jump: the 30-year US yield hits 5.62% and Bitwise sees decoupling from stocks.
Key Takeaways
- Bitcoin swung between $85,500 and $83,700 after inflation cooled more than expected.
- The 30-year US yield hit 5.62%, its highest level since 2002.
- Bitwise says Bitcoin and the S&P 500 are the most decoupled since 2015.
This Thursday shows how little a single data surprise can do against the bond market. Bitcoin (BTC) shot to roughly $85,500 after the data and gave nearly all of the gain back by morning. The October session opens near $83,700.
When bonds set the tempo
In order: US inflation as measured by the PCE index, the Fed's preferred gauge, came in at 3.4% year over year in August, well below the 3.7% economists expected. Excluding energy and food, the reading was 3.0% instead of 3.3%. The market reacted at once, and Bitcoin climbed more than two percent within minutes, from about $83,700 to above $85,400, as BTC-ECHO notes.
The counterweight comes from the long end of the yield curve. CoinDesk author Shaurya Malwa points out that ten-year Treasuries yield about 5.28% and the 30-year sits at 5.62%, the highest since 2002. As long as those levels hold, the reading goes, crypto lacks the air for a breakout. Among the larger coins the picture was mixed: Hyperliquid (HYPE) gained about three percent to $89, Dogecoin (DOGE) around two percent, and Solana (SOL) lost one percent to $119.
Rate hopes have their limits too. The odds of an October hike, previously at 72.5% according to CME FedWatch, dropped after the figures. BTC-ECHO cautions, however, that the revised calculation method likely explains part of the decline. Anyone reading a turning point into the number may be reading too much into it.
A coin cutting loose from the stock market
More interesting than the day's action is the structure behind it. André Dragosch, who heads research in Europe at Bitwise, observes according to BTC-ECHO the weakest link between Bitcoin and the S&P 500 since 2015. In his view, stocks follow growth, while Bitcoin follows the dollar more closely. At the same time, its co-movement with gold has risen to a six-year high, a hint at its role as an inflation hedge.
The institutional side looks steady. Bitwise surveyed 15 large institutions, and none cut crypto exposure in the recent pullbacks. Typical allocations are one to two percent of the portfolio. Based on a model that ties the coin to global money supply, Bitwise cites a fair value of about $197,000, roughly double the price of around $84,000 at the time. That remains a model calculation, not a price call.
What momentum says
At the time of the snapshot, Bitcoin traded at $84,297. Momentum signals a bearish state on the 1-hour timeframe and a neutral one on the 4-hour timeframe. On the daily and weekly timeframes it is bullish. In the short run, the cooling after the inflation jump dominates, while the bigger picture still points up.
Scenarios
If the 30-year yield rises beyond 5.62%, the headwind persists, and the $83,700 level from this morning comes under pressure again.
If yields at the long end ease, as CoinDesk names as a precondition, the interim high at $85,500 comes back into reach.
If the dollar drives the price, as Bitwise suspects, the next inflation and rate data will decide, not the stock market.