“Rising energy prices have reignited inflation concerns, pushing US Treasury yields higher and strengthening the dollar as investors reassess the Federal Reserve’s interest-rate trajectory,” she said. “Despite its reputation as a potential alternative store of value, recent price action suggests investors continue to treat Bitcoin predominantly as a risk asset rather than a reliable geopolitical hedge.”
Traders see a 19.4% chance of a 25-basis-point hike at the Fed’s October 28 meeting, down from 22.1% a week ago and 42.5% a month ago, according to CME FedWatch. Prediction markets Polymarket and Myriad both put the odds of a hike at 17% (Disclaimer: Myriad is a prediction market developed by Decrypt‘s parent company Dastan).
A shift in rate expectations should in principle support Bitcoin, Bitfire’s Jade Shi said, but elevated long-term Treasury yields mean broader financial conditions have not fully eased. That helps explain why Bitcoin has held up without decisively clearing resistance, she said.
Yields and ETF flows
The 10-year Treasury yield stands at 5.24% and the 30-year yield at 5.60%, according to CNBC, having hit 52-week highs of 5.37% and 5.73% last week. Yields reached their highest levels in more than two decades, CoinShares head of research James Butterfill wrote on Thursday.
Butterfill argued that if those yields increasingly reflect concerns about U.S. public finances rather than stronger growth, Bitcoin begins to look “less like a conventional risk asset and more like an alternative to government-issued money.”
Digital asset fund flows have lost momentum after $11.1 billion of inflows since mid-July, according to CoinShares.
U.S. spot Bitcoin ETFs drew $21.13 million in net inflows on Friday, after outflows of $487.07 million on Wednesday and $244.13 million on Thursday, according to SoSoValue.
Technically, Bitcoin has been trading mainly between about $80,300 and $87,100, according to Bitfire. A break above $85,600 on stronger volume could open the way toward $87,395, while a drop below $82,000 would raise the risk of a move toward $79,000.
“The recent easing of Middle East tensions has provided some breathing room, but the sustainability of the rebound will depend on whether the improvement in sentiment translates into a more meaningful retreat in bond yields and the dollar,” Hathorn said. “Attention now turns towards upcoming US inflation data, which could prove decisive in shaping expectations for the Fed’s next move.”
