Bitcoin Slides Below $77,000 as Hot Inflation Data Lifts Fed Hike Odds

Long-dated Treasury yields just hit a level not seen in nineteen years, and bitcoin is the one paying for it. The token slid to roughly $76,700 on Friday morning, its lowest mark in about two weeks, after a wholesale-price report a day earlier ran hotter than expected and traders piled into bets that the Federal Reserve raises rates rather than holds them next week.

The chain reaction started Thursday. August producer prices climbed 5.4% year over year against a forecast of 5.3%, a small miss on paper that mattered because it landed the day before the more closely watched consumer price index. That August CPI print, released Friday morning, showed headline inflation up 0.4% for the month, an annual pace of 3.4%, matching estimates. Core prices, which strip out food and energy, rose 0.3% month over month, hotter than the 0.2% economists had forecast. Bureau of Labor Statistics data attributed a chunk of the increase to gasoline, which jumped 3.9% in August as the war in Iran pushed crude and diesel higher. In the minutes after the release, market odds for a Fed rate increase jumped from under 70% to nearly 90%, with traders also pricing in almost 60% odds of a follow-on hike in October.

Higher rates are simple poison for an asset that throws off no yield of its own. Investors can now park cash in a two-year Treasury near 4.5% or watch the 10-year approach 5%, and that math has been enough to reverse a strong summer for crypto. Spot bitcoin ETFs, which had pulled in roughly three billion dollars over a nine-session inflow streak, bled around $120 million combined on Wednesday and Thursday, more than double the prior day's redemptions. Bitcoin's own chart tells a similar story of exhausted momentum: a bullish golden cross formed on September 8, yet spot prices punched straight through it anyway. Traders now watch $76,270 as the next line of defense, with resistance clustered between $80,000 and $82,000 should sentiment flip.

Ether has held up somewhat better, down close to 2% and trading near $2,450, while riskier tokens took the brunt of the selling; Zcash, Solana and XRP all posted sharper declines on the day. Equities felt the same squeeze, with the S&P 500 closing lower for a fourth straight session. The Fed's policy committee meets Tuesday and Wednesday, and after Friday's data, few traders expect it to sit still.