Following an unexpected surge in US business activity that drove Treasury yields upward, Bitcoin (BTC) dropped beneath $84,000 on Wednesday.
The decline occurred roughly an hour following the economic release, wiping out an earlier morning surge that had pushed Bitcoin past $87,000 on Binance.
What the US Business Survey Showed
Compiled from an early monthly survey of approximately 1,150 American enterprises, the S&P Global flash Purchasing Managers’ Index (PMI) indicates economic expansion when readings exceed 50.
The composite indicator for September climbed to 58.4, up from 56.0 in August, marking the most rapid expansion observed since July 2021. Simultaneously, the manufacturing index advanced to 57.0 compared to 53.9 previously, registering its highest level since May 2022.
At the same time, the survey highlighted escalating expenses. Fuel and transportation costs driven by higher oil prices pushed input prices up at their quickest rate since October 2022, while employment growth reached its fastest pace since June 2022.
Chris Williamson, chief business economist at S&P Global Market Intelligence, cautioned about future economic pressures.
“Firms’ input costs have meanwhile jumped in September at the steepest rate for four years, with fuel and transport costs spiking higher thanks to the rise in oil prices seen during the month, which will add further to the upward pressure on selling prices and inflation in the coming months,” said Chris Williamson.
Why Higher Yields Pushed Bitcoin Below $84,000
Representing the compensation investors require for lending money to the US government, Treasury yields generally increase when financial markets anticipate elevated interest rates.
According to TradingView figures, the 10-year yield ascended to 5.058% following the announcement, up from a Tuesday close of 4.96% as reported by the Treasury.
On September 16, the Federal Reserve (Fed) elevated its benchmark interest rate to a target range between 3.75% and 4%, noting in its official statement that the increase would accelerate progress toward the 2% inflation objective.
Because Bitcoin generates no interest, rising yields diminish its appeal relative to yield-bearing assets. BeInCrypto previously highlighted this specific vulnerability on September 15 when the 10-year yield initially reached the 5% threshold.
This market pullback followed reports from BeInCrypto noting a 13% gain for Bitcoin since the Fed’s rate decision. Just one day prior, Tom Lee and the chief executive of iTrustCapital expressed optimism that the worst phase had passed.
The final September PMI data releases are scheduled for October 1 regarding manufacturing and October 5 concerning the services sector.