Bitcoin Tumbles Below $77,000 as US Inflation Surges

Bitcoin's price dropped below $77,000 on Thursday as risk assets weakened in response to fresh US inflation data and surging oil prices. The August Producer Price Index (PPI) rose 5.4% year-on-year, exceeding expectations by 0.1 percentage points.

The sharp increase in PPI reinforced expectations of tighter financial conditions and reinforced the case for a 0.25% Federal Reserve rate hike at its September 16 meeting. The CME Group FedWatch Tool showed the probability of this outcome rising to 69.8%, up from 61.2% the previous day.

The US 30-year bond yield climbed to 5.353%, the highest level since June 2007, despite a $6 billion Treasury buyback operation aimed at reducing long-term debt. This marked a notable increase in yields, even after the Treasury repurchased $6 billion worth of Treasurys on Wednesday.

The jump in yields and inflation expectations weighed heavily on Bitcoin's price, which slipped 2% on the day as equities weakened and macro variables tightened. The drop below $77,000 comes amid a broader risk-off tone, driven by higher energy prices and concerns over Federal Reserve policy.