Bitcoin's Inflation Rally Fades as Treasury Yields Rebound

Bitcoin's brief push above $85,000 was met with a swift reversal on September 30. The sudden jump came as softer-than-expected US inflation data raised hopes that the Federal Reserve might pause its rate hikes.

The August personal consumption expenditures report showed core inflation matched July's revised annual rate of 3.0%, while headline inflation rose 0.3% for the month and 3.4% annually. This eased concerns about another rate hike, which would raise borrowing costs and make interest-paying savings more attractive than assets like Bitcoin.

However, the initial buying momentum was not enough to sustain the move, and Treasury yields rebounded as well. The US 10-year yield recovered to around 5.28% after falling as low as 5.20%. A rebound in yields can weaken support for riskier assets by increasing the return available on government bonds.

The four-hour chart shows Bitcoin clearing resistance briefly, then falling back below it. The 50 SMA remains a key hurdle, and reclaiming this level would be an important sign of buyer strength.