Bitcoin's Rally Above $85,000 Threatened by US Factory Costs Spike

US manufacturers reported a significant increase in input prices in September, with 58.6% of respondents citing higher costs, up from 46.2% in August. This could pose a financing risk for Bitcoin if investors expect higher interest rates ahead of Friday's jobs report.

The Institute for Supply Management's manufacturing prices index rose 6.8 points to 77.9, while new orders and employment remained in expansion. This adds evidence to the rates debate, with the Federal Open Market Committee having already raised its target range by a quarter percentage point to 3.75% to 4% on September 16.

New York Fed President John Williams said another upward adjustment might be appropriate late this year if the economy broadly follows his forecast. However, he noted there was no evidence yet of the identified price shocks spilling into broader, more persistent inflation.

For Bitcoin, the potential pressure splits into more expensive borrowing, which could make financed risk-taking less attractive, and higher returns on interest-bearing dollar assets, which could also raise the return investors demand to hold Bitcoin.