Bitcoin Faces ‘Unusual Mix’ of Bearish Inflation, Bullish Buyback Failure

Bitcoin unusual mix — Bitcoin’s near-term upside may be capped by higher-than-expected inflation, but a failing Treasury bond buyback program could strengthen its medium-term case, according to a CoinShares report.

In a Friday note, CoinShares Head of Research James Butterfill said firmer core CPI data increased the probability of tighter Federal Reserve policy, which could limit Bitcoin’s immediate rise above $80,000. Markets now see an 85% chance of a rate hike next week.

However, Butterfill argued the longer-term bullish narrative rests on the U.S. Treasury’s expanded bond buyback program failing to lower long-term yields. If yields remain high, pressure would mount for a much larger “bazooka-style” intervention, fueling the currency debasement trade that benefits assets like Bitcoin and gold.

The report concluded that while current inflation data is negative, the potential for substantial future Treasury intervention “could become one of the more powerful medium-term catalysts for Bitcoin.”