Bitcoin's price dropped below $85,000 as the US 10-year Treasury yield surged past 5%, driven by stronger-than-expected September PMI data. This indicates a hawkish shift in bond market expectations for the Fed, creating headwinds for risk assets like Bitcoin despite strong economic growth signals.
The filing highlights Bitcoin's price decline in response to a significant surge in the US 10-year Treasury yield, which reached a 19-year high. This yield spike was triggered by September's flash PMI data exceeding forecasts, signaling robust economic growth and increasing inflation pressures. The bond market is now pricing in a more hawkish Federal Reserve, which typically creates a less favorable environment for risk assets like Bitcoin. While strong economic growth could eventually support Bitcoin, the immediate implication of higher yields and potential rate hikes is negative, as it increases the cost of capital and makes safer assets more attractive. Traders should monitor Fed communications and upcoming economic data for shifts in monetary policy expectations.