Bitcoin price rises despite hot US inflation data

In a Friday note, CoinShares Head of Research James Butterfill stated that firmer-than-expected core inflation raises the odds of tighter Fed policy and could cap bitcoin below $80,000 for now. However, the longer-term case rests on the U.S. Treasury’s bond buyback program failing to bring down long-end yields, a failure that could ultimately feed the debasement narrative supporting both bitcoin and gold.

Data revealed that the consumer price index, excluding food and energy, climbed 0.3% in August from a month earlier, which was higher than expected. According to CME's FedWatch tool, traders believe there is an 85% chance interest rates will be higher after the Federal Reserve meets next week. Bitcoin has historically performed well in a low interest rate environment.

The U.S. Treasury’s expanded bond buyback program has so far failed to materially suppress long-term yields. If yields remain stubbornly high, Butterfill said, pressure will build on Treasury Secretary Scott Bessent to escalate to a much larger buying program aimed at forcing borrowing costs down. Bitcoin experienced one of its best runs in years in August after Bessent announced the department would double the size of its long-dated bond buybacks, leading some to suggest the debasement trade is back.