Bitcoin experienced a notable decline, dropping to $77,189 on Thursday, as a confluence of factors, including unexpected inflation data, surging oil prices, and rising bond yields, weighed heavily on risk assets.
The world’s leading cryptocurrency fell 1.76% following the release of the August Producer Price Index (PPI) report by the Bureau of Labor Statistics. The headline PPI registered at 5.4% year-on-year, slightly above the anticipated 5.3%, with revisions to July’s figures compounding the pressure on markets already apprehensive ahead of the upcoming Consumer Price Index (CPI) report.
The PPI data triggered an uptick in Fed rate hike expectations, with the odds of a 0.25% increase during the September 16 FOMC meeting climbing to around 72%, up from approximately 64% prior to the announcement.
Adding to the pressure, WTI crude oil prices crossed the $100 per barrel mark for the first time since May 21, driven by renewed geopolitical tensions, particularly military actions between the U.S. and Iran in the Strait of Hormuz. Similarly, Brent crude oil followed suit, surpassing $105 per barrel.
Bond Yields Hit Multi-Decade Highs
In addition to the inflation data, U.S. bond yields surged, with the 30-year yield reaching 5.353%, the highest level since June 2007. The 10-year yield also climbed to 4.968%, its peak since November 2023, despite the U.S. Treasury’s recent $6 billion debt buyback operation. Commenting on the situation, trading resource The Kobeissi Letter noted, “The bond market is quite literally fighting the U.S. Treasury.” The European Central Bank also raised rates by 0.25% on Thursday, marking its second hike of 2026.
ETF Outflows and Spot Demand Decline
Crypto analyst Ted Pillows raised alarm over the state of Bitcoin’s spot demand, indicating that it has fallen to levels not seen since Bitcoin was trading at $69,000. He warned, “Either spot buyers need to do the lifting, or the price will inevitably drop to $70,000.” This sentiment reflects increasing concerns among traders who are closely monitoring demand-side data.
On the same day, Bitcoin spot ETFs experienced $283 million in net outflows, marking the third consecutive day of significant withdrawals. On-chain data has also revealed that Bitcoin sell-side risk is returning to rare lows, with sellers at the $80,000 mark fading from visibility.
In a more optimistic note, Coinbase CEO Brian Armstrong conveyed his belief that Bitcoin has reached the bottom of its current four-year cycle. He further expressed hope regarding improving regulatory clarity in the crypto sector, particularly referencing the Clarity Act as being “right on the finish line” in the Senate.
As the market braces for further developments, traders and investors are left to ponder what the future holds for Bitcoin amidst these shifting economic conditions.
