Bitcoin returned to the $79k area on Friday after U.S. August inflation data was released, which was broadly in line with expectations overall, but sparked a new wave of rapid volatility in the markets.

📊 Inflation ignites strong momentum in BTC

Core Consumer Price Index (CPI) rose by 0.3% month-over-month, exceeding expectations of 0.2%, while annual inflation reached 3.4%.

After the data was released, Bitcoin initially fell to around $76,000, before reversing direction and rising by more than 3% during the day, returning close to the $79,000 level.

It wasn’t just crypto at the center of the moves; U.S. stocks also regained strength, rising:

S&P 500: about 1%

Nasdaq Composite: about 1.1%

🇺🇸 Bond yields add more pressure

In contrast, U.S. Treasury bond yields saw sharp moves following inflation data.

The 30-year bond yield reached its highest level since June 2004, before retreating to 5.309%, signaling that markets are repricing their expectations for the path of monetary policy.

🏦 Rate-hike odds are rising

According to CME’s FedWatch tool, the odds of a 0.25% rate hike at the September 16 Federal Reserve meeting rose to 85%, from 60% a week earlier.

This reflects growing traders’ conviction that the Federal Reserve may tighten monetary policy if inflation remains above the target level.

⚠️ Why does that matter for Bitcoin?

Rising bond yields increase the opportunity cost of holding high-risk assets, which may pressure assets that rely heavily on abundant liquidity.

In this context, QCP Capital warned that rising U.S. yields could pose an additional burden on Bitcoin in the coming phase, especially as monetary policy remains tight.

The company believes that the rise in yields is not driven by economic growth alone; it also reflects expectations of tighter monetary policy and a higher risk premium in equities and bonds.

This creates a more complex environment for Bitcoin, especially as the risk-free yield nears 5% without strong nominal momentum typically supporting continued yield growth.

🔍 What are traders watching now?

Even though BTC has regained the $79,000 level, this move alone is not enough to confirm a steady bullish trend.

The market remains highly sensitive to any new surprises in inflation data or any shift in the Fed’s tone, so liquidity, bond yields, and expectations for the September 16 meeting will be key factors in determining the next move.

Bottom line:

Bitcoin’s move above $79,000 still appears, for now, to be more of a direct reaction to market data than a confirmed trend. Therefore, waiting for confirmation of the move and monitoring yields and liquidity is more important than chasing the price.