Rising yields, oil prices leave bitcoin vulnerable ahead of U.S. inflation report

The price of bitcoin BTC$76,847.77 has dropped over the past 24 hours, and what happens next may hinge on whether today’s U.S. inflation report can halt the selloff in government bonds.

The largest cryptocurrency is trading near $77,000, with the 10-year Treasury yield around 4.94% and the Dollar Index near 99.15. August’s consumer price index, due at 8:30 a.m. ET, could determine how much pressure those markets exert on crypto heading into next week’s Federal Reserve interest-rate decision.

The concern is that borrowing costs reflect inflation risks rather than stronger growth.

“This is the worst mix for Bitcoin: a competing 5% risk-free rate without the nominal-growth impulse that usually accompanies yield moves,” trading firm QCP said in its latest note. Brent crude’s climb as high as $109 a barrel adds to the difficulty of bringing inflation down.

Economists estimate that core consumer prices, which exclude food and energy, rose 0.2% from July. QCP pointed out the probability of a Fed rate increase next week at roughly two-thirds, nearly in line with prediction markets’ 61% odds.

A softer inflation print could reduce those rate-rise expectations and give bitcoin room to recover, while an upside surprise would risk another rise in yields ahead of the Fed meeting.

The approaching weekend could amplify any post-CPI moves as liquidity thins. Once U.S. markets close, spot bitcoin ETF trading will pause until Monday, as will most institutional activity, leaving crypto markets to absorb fresh geopolitical headlines or any other black swan event. Stay alert!

Read more: For analysis of today's activity in altcoins and derivatives, see Crypto Markets Today . For a comprehensive list of events this week, see CoinDesk's "Crypto Week Ahead."

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