Bitcoin Rebounds Past $79K as US CPI Data Spurs 22-Year Bond Yield High

Bitcoin (BTC) climbed back above $79,000 on Friday after the release of August US Consumer Price Index (CPI) data broadly matched market expectations, temporarily easing fears of a sharper inflation surprise. The BTC/USD pair initially dipped to $76,000 before reversing sharply, gaining more than 3% on the day according to TradingView charts. The rebound mirrored US equities, with the S&P 500 rising 1% and the tech-heavy Nasdaq Composite gaining 1.1% as traders repositioned following a weaker start to the session.

Core CPI, which excludes volatile food and energy prices, rose 0.3% month-on-month, exceeding consensus forecasts of 0.2%, while headline CPI came in at 3.4% year-on-year. The Bureau of Labor Statistics (BLS) reported that gasoline prices surged 3.9% in August, accounting for over one-third of the monthly all-items increase, with energy up 2.1% overall. The inflationary pressure was attributed in part to a tightening US-Iran conflict and its impact on WTI crude oil prices, which hovered near $100 per barrel.

The CPI print sent shockwaves through US bond markets, with the 30-year Treasury yield briefly hitting its highest level since June 2004 before pulling back to 5.309%. Trading resource The Kobeissi Letter described conditions as a "nervous market" in a post on X. QCP Capital analysts warned that rising bond yields combined with tightening Federal Reserve policy could weigh on Bitcoin in the near term.

Traders responded by sharply repricing Federal Reserve rate-hike expectations. According to CME Group's FedWatch Tool, implied odds of a 0.25% interest rate hike at the September 16 FOMC meeting climbed to 85%, up from 60% just one week earlier. The previous day's Producer Price Index (PPI) overshoot had already reinforced hawkish sentiment, leaving Fed officials, including Governor Christopher Waller, publicly divided over the appropriate policy path as the central bank prepares for its next decision.