Bitcoin's Short-Term Outlook Darkens Amid Soaring Inflation, Failing Buybacks

A new report from CoinShares suggests that Bitcoin's path higher may be difficult in the short term due to firmer-than-expected core inflation. This could lead to tighter Federal Reserve policy and potentially cap Bitcoin below $80,000.

However, the longer-term case for Bitcoin is improving as the U.S. Treasury's bond buyback program appears to be failing. If this continues, it could ultimately feed the debasement narrative that has supported both Bitcoin and gold.

Data on Friday revealed that the consumer price index (CPI) excluding food and energy climbed 0.3% in August from a month earlier, higher than expected. This suggests that interest rates may be increased after the Federal Reserve meets next week, which could be negative for Bitcoin as it typically performs well in low-interest rate environments.

The U.S. Treasury's expanded bond buyback program has so far failed to materially suppress long-term yields. If yields stay stubbornly high, pressure will build on Treasury Secretary Scott Bessent to escalate the buying program to a larger 'bazooka-style' effort aimed at forcing borrowing costs down.