Bitcoin’s Push to $85.5K Fades as Treasury Yields Resist Decline

Bitcoin briefly surged to $85,500 after softer U.S. inflation data, but the move lost steam as Treasury yields remained close to their highest levels since 2002.

BTC was trading just above $83,700 in Thursday’s Asian morning session, up 0.4%. The cryptocurrency had moved above $85,000 on Wednesday after the August PCE report came in weaker than expected, but the rally faded as bond yields remained elevated.

HYPE was the top performer among major tokens, gaining 3% to around $89. DOGE rose nearly 2% to just under $0.10. Ether, BNB, TRX and ZEC each added less than 1%, while XRP held steady at $1.50. SOL declined nearly 1% to below $119, according to CoinDesk data.

Softer PCE Reading Shifts Rate Expectations

The August PCE report showed annual inflation at 3.4%, while the core reading, which excludes food and energy, increased 3.0%.

Dan Khus, chief analyst at LVRG Research, said the softer figures reduced expectations for another Federal Reserve rate hike in October and increased the focus on a potential December move.

“August’s PCE report showed inflation cooling more than expected, with prices up 3.4% from a year earlier and 3.0% excluding food and energy, which has reduced the odds of another Federal Reserve rate increase in October and made December look like the more likely next move,” Khus said in an email to CoinDesk.

The initial response from crypto markets was positive, with bitcoin climbing back above $85,000 as Treasury yields briefly moved lower.

“Crypto markets took that as a relief signal, and bitcoin jumped back above $85,000 as bond yields slipped and investors became more willing to buy risk assets again,” Khus said.

Yields Keep Pressure on Risk Assets

The move quickly ran into resistance from the bond market during late U.S. trading.

The 10-year Treasury yield was around 5.28%, close to its Wednesday high. The 30-year yield held at roughly 5.62% after touching its highest level since 2002 during the New York session.

Oil prices declined, helping temper the bond selloff, while the U.S. dollar strengthened.

The risk-on tone extended into Asian markets, with Nasdaq 100 futures up 0.8% and S&P 500 futures 0.4% higher. Japan’s Nikkei climbed 2.7%, while South Korea’s Kospi rose 1.2% following an upbeat forecast from Micron Technology that boosted chip stocks.

Alphabet gained 1.5% in extended trading after Google began rolling out Gemini 4 Argon, its latest flagship AI model.

Lower 10-Year Yield Could Support BTC

Bitcoin’s reaction to the PCE report showed that easing inflation pressure can provide an initial boost, but elevated long-term borrowing costs remain a constraint.

With the 10-year Treasury yield still close to 5.3%, BTC struggled to maintain its move above $85,000.

A sustained decline in the benchmark yield would create a more favorable environment for risk assets and potentially allow bitcoin’s next advance to hold for longer.