Treasury Pressure Could Become Catalyst for Bitcoin Despite Inflation Headwinds

Bitcoin's price briefly rose above $79,000 after US inflation data was released, but it retracted to near $77,000. 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 (BLS). On an annual basis, CPI increased 3.4%, unchanged from the previous month and matching economist expectations.

CoinShares noted that the inflation figures could strengthen the case for a September rate hike, reinforcing the risk that monetary policy remains restrictive. This would present a near-term headwind for Bitcoin, particularly following its recent resistance as it attempts to move above $80,000.

The firm added that a sustained break above that level would require softer economic data, a more dovish shift from the Fed, or another notable policy catalyst. CoinShares highlighted growing pressure in the US Treasury market as another important factor for Bitcoin. The Treasury's expanded bond-buyback program has so far failed to materially reduce long-term yields, despite increased purchases at the longer end of the curve.

The firm argued that persistent inflation, fiscal concerns and an elevated term premium continue to weigh on the Treasury market. Paradoxically, CoinShares thinks that failure could become increasingly supportive for Bitcoin over the longer term. Continued pressure on long-term yields could increase calls for more aggressive Treasury intervention, which would strengthen the debasement narrative supporting Bitcoin and Gold.