A new CoinShares report said bitcoin's price could be hurt in the short-term but benefit in the long-term. Bitcoin’s path higher just got harder in the short term, but the setup further out may be improving, according to a new report. In a Friday note, European asset manager CoinShares’ Head of Research, James Butterfill, said firmer-than-expected core inflation raises the odds of tighter Fed policy and could cap bitcoin below $80,000 for now.
S. Treasury’s bond buyback programme failing to bring down long-end yields — a failure that could ultimately feed the debasement narrative that has supported both bitcoin and gold. “The result is therefore a somewhat unusual policy mix for Bitcoin,” the report read.
“Today’s CPI data is negative at the margin, increasing the probability of tighter monetary policy and potentially limiting the immediate upside. 3% in August from a month earlier — higher than expected. According to CME’s FedWatch tool, traders think there is a 85% chance interest rates will be higher after the Federal Reserve meets next week.
Bitcoin has typically performed well in a low interest rate environment. S. Treasury’s expanded bond buyback programme has so far failed to materially suppress long-term yields.
If yields stay stubbornly high, Butterfill said, pressure will build on Treasury Secretary Scott Bessent to escalate to a much larger, “bazooka-style” buying programme aimed at forcing borrowing costs down. Bitcoin in August had one of its best runs in years after Treasury Secretary Scott Bessent announced the department would double the size of its long-dated bond buybacks. The announcement and subsequent price surge has led some to say the much talked-about debasement trade is back.
The so-called debasement trade is when investors buy an asset as a way to hedge against a currency losing value. Bitcoin and gold have both benefited as part of the trade as the dollar weakens.
