Bitcoin fell below $77,000 on 10 September as oil prices moved above $100 a barrel and a global bond sell-off increased expectations of another Federal Reserve interest-rate rise.
The cryptocurrency reached an intraday low of $76,676.07. Nasdaq 100 futures fell 0.7%, while the 10-year Treasury yield rose to 4.93% and the 30-year yield reached 5.35% – its highest level in 19 years.
Markets shifted after another acceleration in US producer prices and a fresh rise in crude oil. Traders were pricing in about a 76% chance of a 25-basis-point Federal Reserve increase at next week’s meeting.
The latest inflation figures, however, cover little of oil’s most recent advance, creating concern that official data may be understating the energy-driven pressure now building.
Oil surge raises fresh inflation concerns
West Texas Intermediate crude rose more than 4% to above $100 a barrel for the first time since May. Brent crude climbed beyond $105 after escalating attacks on Middle East shipping routes renewed concerns about supply disruption. Brent is now more than 30% above its early-August low.
US producer prices rose 0.4% in August and 5.4% over the previous year, compared with an annual increase of 4.8% in July. Core producer prices increased 0.2% from the previous month, below the 0.3% forecast, but the softer figure did little to slow the bond sell-off.
Joseph Brusuelas, principal and chief economist at RSM US LLP, said the producer-price survey period ended on 11 August, before the latest increases in crude, petrol and diesel prices.
He estimated that current diesel prices were equivalent to crude trading at about $207 a barrel. Higher energy costs, he said, could begin feeding into wholesale prices and core inflation during September.
Brusuelas added that the combination of inflation and energy prices strengthened the case for a Federal Reserve increase at its 15-16 September meeting. Friday’s consumer-price report is likely to influence the final decision.
The European Central Bank raised its deposit rate by 25 basis points to 2.5% on 10 September, its second increase this year, after the energy shock pushed euro-area inflation above 3%. It now expects inflation to average 2.5% in 2027, up from its June forecast of 2.3%.
That decision added to a global repricing in government debt, with investors demanding higher yields as central banks respond to another energy-led inflation shock.
Bond market becomes next test
The 10-year Treasury yield moved towards 5% even after the US government expanded an operation designed to improve liquidity in longer-dated debt.
The 30-year yield reached 5.35% ahead of a new Treasury auction on 10 September. A day earlier, the Treasury had tripled the size of its next long-term buyback to as much as $6bn.
Brusuelas said inflation figures, oil prices and central-bank policy had put a test of 5% for the 10-year yield “in the immediate offing”. A hotter-than-expected CPI report on 11 September, he warned, could send the yield well beyond that level.
The 30-year auction is the first immediate test of whether investors will absorb more long-term debt at current yields. Brusuelas said the rise in the long bond before the sale suggested it could receive a difficult response.
The two-year Treasury yield also climbed to about 4.50%, nearly one percentage point above the top of the Federal Reserve’s current 3.50%-3.75% target range, as traders rebuilt expectations of further tightening.
Crypto leverage unwinds
More than 161,900 traders were liquidated over the previous 24 hours, with forced position closures totalling about $568m, according to CoinGlass.
Bitcoin long positions accounted for about $138m of the liquidations, while Ethereum longs lost a further $113m. CryptoQuant data showed selling intensified around the macroeconomic releases, with Bitcoin taker-sell volume on Binance exceeding $1.4bn in one hour.
More than $60m of Bitcoin positions were liquidated during the same period.
Glassnode data indicates that supply has accumulated between roughly $76,000 and $82,000, below a larger long-term-holder block between $83,000 and $86,000, where about 1.07 million BTC were bought.
The fall on 10 September therefore tested a support cluster formed during Bitcoin’s latest recovery. A sustained break below it would weaken one of the buffers beneath the market. Glassnode places deeper accumulation support at about $62,000-$65,000.
Friday’s CPI report is the next test. Economists expect headline consumer prices to rise 0.4% in August and core prices by 0.2%. A stronger reading could increase expectations of a Federal Reserve hike, push the 10-year yield above 5% and add pressure to Bitcoin as buyers defend the $76,000-$82,000 range.
Even that report will capture only part of the latest oil surge. More complete evidence of crude trading above $100 will come in later inflation data, leaving traders to decide how much of September’s price shock to anticipate before official figures reflect it.
