Bitcoin Soars on US CPI, But Higher Yields Still Loom as Headwind

Bitcoin rebounded to $79,000 on Friday after US core inflation data came in broadly in line with expectations, easing pressure across risk assets. The relief rally unfolded against a backdrop of sharp moves in US bond yields, which market participants say can still make it harder for Bitcoin to sustain gains.

The August US CPI report showed that core prices rose 0.3% month-on-month, slightly above the 0.2% expected by traders. This kept the Federal Reserve's next steps firmly in the spotlight, with implied odds of a 0.25% rate hike at the September 16 meeting climbing to 85%, up from roughly 60% a week earlier.

Trading firm QCP warned that higher yields and tightening expectations can become a headwind for Bitcoin until Treasury liquidity support takes hold. The firm suggested that the rise in US yields has increasingly been driven by expectations for tighter policy, rather than stronger growth.