Bitcoin Defies Odds, Holds Ground Against Rising Inflation and Rates

Bitcoin is trading at $79,276.76, up 0.94% from the session's start and surprisingly holding strong against a backdrop of rising inflation and interest rates.

The asset has cleared several key hurdles: oil prices have surpassed $100 for the first time since late July, the 10-year Treasury yield sits at 4.78%, and futures markets now assign a 60% probability to a 25-basis-point increase in the federal funds rate at the upcoming Federal Reserve meeting.

Given these conditions, a leveraged, non-yielding asset like Bitcoin should be plummeting, but instead it's trading near its recent highs. This has led some analysts to conclude that the asset is no longer being priced as a liquidity instrument, but rather as a debasement asset - one that's tied to fiscal risk and inflation.

The upcoming August CPI print will serve as a key test for this thesis: if it confirms the switch, Bitcoin may continue to hold its ground; if not, it could be vulnerable to further declines.