Surging US Manufacturing Costs Dampen Bitcoin's Rebound
The US manufacturing sector has seen a significant increase in input prices, which is expected to impact the overall economy and, in turn, Bitcoin's price. The Institute for Supply Management (ISM.US) released data showing that the manufacturing price index rose to 77.9 in September, a 6.8-point increase from August's 71.1. This rise in input costs is coupled with the expectation of further interest rate hikes by the Federal Reserve, which could lead to higher borrowing costs and yields on dollar-denominated assets.
New York Fed President John Williams stated that another rate hike later this year could be appropriate if the economy unfolds as projected. The increased borrowing costs and yields on interest-bearing US dollar assets may dampen risk appetite, making it challenging for Bitcoin to break through the key resistance level of $85,000.
The real test lies in how interest-rate expectations evolve and whether Bitcoin reacts accordingly. The upcoming employment data, scheduled to be released by the US Bureau of Labor Statistics on October 2, will be decisive in determining the fate of Bitcoin's rebound.
According to Federal Reserve theory, policy changes affect short-term borrowing costs and yields on short-term US Treasury securities, while policy expectations influence long-term interest rates. The research from the New York Fed found no systematic response of Bitcoin to monetary policy or macroeconomic news.