Treasury Intervention Failure Could Boost Bitcoin Amid Inflation Pressures

Despite persistent inflation pressures that could keep Federal Reserve policy restrictive and limit Bitcoin's potential to rise above $80,000, CoinShares says a failed US Treasury intervention in the bond market could actually benefit the cryptocurrency. The firm notes that the Treasury's expanded bond-buyback program has so far failed to lower long-term yields, despite increased purchases at the longer end of the curve.

This has led to growing pressure on the Treasury market, with persistent inflation, fiscal concerns, and an elevated term premium continuing to weigh on borrowing costs. However, CoinShares argues that continued pressure on long-term yields could increase calls for more aggressive Treasury intervention, which could strengthen the debasement narrative supporting Bitcoin and Gold.

The Consumer Price Index (CPI) rose 0.4% in August, accelerating from a 0.1% increase in July, according to the Bureau of Labor Statistics. On an annual basis, CPI increased 3.4%, unchanged from the previous month and matching economist expectations. The crypto market responded positively to the inflation print, with Bitcoin briefly rising above $79,000 before retreating to near $77,000.

Institutional demand for digital assets has shown signs of caution, with digital asset investment products recording $243 million in outflows this week, despite roughly $1.3 billion of inflows last week.