US Manufacturing Costs Soar, Threatening Bitcoin Rally

The US manufacturing sector has reported significant input-price increases in September, which could pose a threat to Bitcoin's rally above $85,000. The Institute for Supply Management's (ISM) release on October 1 showed its manufacturing prices index at 77.9, up 6.8 points from August's 71.1.

The ISM's diffusion-index method counts higher responses plus half of unchanged responses, and the 77.9 reading is a measure of how widely monthly increases are reported. A higher percentage of respondents, 58.6%, reported higher input prices compared to 46.2% in August.

This development comes amidst a policy backdrop where the Federal Open Market Committee (FOMC) has already raised its target range by a quarter percentage point to 3.75% to 4%. New York Fed President John Williams suggested that another upward adjustment might be appropriate late this year if the economy broadly follows his forecast.

The potential pressure on Bitcoin runs through interest rates, as higher borrowing costs could make financed risk-taking less attractive and higher returns on interest-bearing dollar assets could raise the return investors demand to hold Bitcoin. The jobs report scheduled for October 2 will provide further insight into the economic landscape and its implications for Bitcoin.