Bitcoin Rally Threatened by Rising US Factory Costs

US manufacturers reported a significant increase in input costs in September, sparking concerns that this could threaten Bitcoin's rally above $85,000. According to the Institute for Supply Management, the manufacturing prices index rose to 77.9 in September, up 6.8 points from August's 71.1. This increase in input costs could lead to higher interest rates, which could make financed risk-taking less attractive and raise the return investors demand to hold Bitcoin.

The Federal Open Market Committee has already raised its target range by a quarter percentage point to 3.75% to 4% on September 16, and New York Fed President John Williams suggested that another upward adjustment might be appropriate late this year if the economy follows his forecast. The September jobs report, scheduled for October 2, will provide more insight into the potential impact of higher interest rates on Bitcoin.

The Bureau of Labor Statistics will release the September Employment Situation report on October 2, which will provide a more comprehensive view of the labor market and its potential impact on interest rates. If the jobs report strengthens expectations of higher rates, it could lead to a decrease in Bitcoin's price. However, a February 2023 New York Fed staff study found no systematic Bitcoin response to monetary and macroeconomic news in its historical intraday sample, suggesting that the relationship between interest rates and Bitcoin is not straightforward.