Experts say: CPI failed to change Fed expectations, and Bitcoin's next move depends on U.S. bond yi

Analysts: Bitcoin's next wave of trend may be more affected by U.S. bond yields and oil prices.

Analysts pointed out that after August consumer price index (CPI) data failed to substantially change market expectations for the September meeting of the Federal Reserve, the next major move in Bitcoin (BTC) may depend more on U.S. bond yields and oil prices than on another round of inflation surprises.

The market has basically digested the report. Data showed that overall inflation rose 0.4% month-on-month and 3.4% year-on-year in August. Core CPI increased by 0.3% month-on-month and 2.4% year-on-year. Although the monthly core reading was slightly higher than expected, annual figures have dropped from 2.5%. Bitcoin fell to around $76,500 after the data was released, and then recovered to $78,000. This mild market reaction suggests that traders have shifted their attention from the inflation data itself and instead focused on broader financial conditions that will determine whether cryptocurrencies can sustain their recovery.

U.S. bond yields may be more decisive than CPI headlines

U.S. bond yields have become a key signal for Bitcoin because they determine how markets will price future monetary policy and the cost of capital for risky assets. Lacie Zhang, a research analyst at Bitget Wallet, said that Bitcoin's recovery may require the stability of U.S. bond yields and oil prices, as well as the continued inflow of spot Bitcoin ETF funds.

XYO co-founder Markus Levin made a similar view, arguing that investors should pay more close attention to U.S. bond yields instead of CPI headlines from now on. He expects the Fed to raise interest rates by 25 basis points in September and then suspend interest rates, rather than embarking on a continued tightening cycle. That distinction may be more important than the September decision itself.

If U.S. bond yields remain controllable, the additional impact of the market's expected interest rate hike on Bitcoin may be limited. However, if market expectations shift to multiple further interest rate hikes, it will bring stronger headwinds to the asset.

Oil prices pose a second inflationary risk

Since the continued rise in energy prices may keep inflationary pressures high, oil prices will become another major variable in the market even if core price growth continues to slow down. Amid geopolitical tensions, Brent crude recently approached $110 a barrel before falling back from its high. The change adds another layer of uncertainty to a central bank that is already balancing concerns about persistent inflation with economic growth.

For Bitcoin, this risk is indirect but important. High oil prices strengthen expectations of tightening monetary policy, push up yields and make speculative assets less attractive. Zhang said that without the dual stability of oil prices and U.S. bond yields, the latest Bitcoin rally may be just a soothing market.

Bitcoin needs to transcend the logic of "the Federal Reserve suspending interest rate hikes in September"

The latest inflation report does not eliminate the reason for a September rate hike. Iliya Kalchev, an analyst at Nexo Dispatch, said that the release of CPI data has left the Fed's decision still pending because the data is generally in line with expectations and there are no obvious signs of hawkish or dovish tendencies.

This makes policymakers have to weigh between still high inflation and a labor market that shows sufficient resilience to make aggressive easing more difficult. The more important question for the crypto market is what will happen after September.

Levin expects the Fed to raise interest rates once and then pause. If investors are more confident that the tightening cycle is coming to an end, this could stabilize financial conditions. Conversely, if expectations shift to more rate hikes, it will have the opposite effect and may push Bitcoin into a longer period of weakness.

ETF demand may determine whether Bitcoin can hold the US$78,000 mark

Institutional capital flows provide another important test of whether Bitcoin can absorb tighter financial conditions. Zhang said that to achieve sustained recovery, in addition to stable yields and oil prices, it also requires a continuous inflow of spot Bitcoin ETF funds. Without this combination, the recent rebound may not develop into a broader trend.

Bitcoin's current key technical positions are relatively clear. Zhang identified the US$75,000 to US$76,000 region as short-term support, while US$80,000 was the first important upside test level. Bitget analyst Lewis Huang said that if Bitcoin can remain above about US$76,270, it shows that underlying demand remains strong despite uncertainty in the interest rate path.

This means that in the market Bitcoin faces, the next catalyst may no longer come from another inflation data. Instead, traders will pay close attention to whether U.S. bond yields stabilize, whether oil prices fall further, and whether ETF demand returns strong enough to offset the pressure from expectations of "higher interest rates staying longer."