Bitcoin Tumbles Below $77,000 as US PPI and Oil Prices Soar

Bitcoin's price dropped below $77,000 as broader risk sentiment reversed sharply on Thursday. This move was influenced by US inflation data and a surge in oil prices, which pushed yields higher and tightened conditions for non-yielding assets like BTC.

The August Producer Price Index rose 5.4% year-on-year, exceeding expectations by 0.1 percentage points. The increase in PPI reinforced expectations of tighter financial conditions, with the probability of a 0.25% Fed hike at the September 16 meeting increasing to 69.8%, according to CME Group's FedWatch Tool.

The US 30-year bond yield reached its highest level since June 2007, climbing to 5.353%. This rise in yields was despite a $6 billion Treasury buyback operation, which was seen as having little impact on the market. The contrast between the intervention and the ongoing upward trend in yields suggests that underlying demand for long-duration risk is weakening.

The combination of inflation concerns and rising bond yields has made it clear that Bitcoin's price will remain highly responsive to macro headlines. As the market waits for the next Consumer Price Index (CPI) release on Friday, investors are bracing themselves for either a validation of 'higher-for-longer' fears or a cooling of the inflation picture.