Bitcoin fell below $77,000 on Sept. 10 as oil rose above $100, and a global bond selloff pushed traders toward another Fed hike.
BTC reached an intraday low of $76,676.07, Nasdaq 100 futures fell 0.7%, and the 10-year Treasury yield climbed to 4.93% while the 30-year touched 5.35%, its highest level in 19 years.
The moves followed another acceleration in US producer prices and a renewed surge in crude, pushing rate markets to price in about a 76% chance of a quarter-point Federal Reserve increase next week.
The complication is that the latest inflation reports capture little of oil's most recent advance, leaving traders to price an energy shock before it fully appears in official data.
Oil's latest leg higher came after much of the August inflation data had already been collected, increasing the risk that current readings understate the price pressure now building through energy markets.
West Texas Intermediate crude rose more than 4% to above $100 a barrel for the first time since May, while Brent climbed past $105 after escalating attacks on Middle East shipping routes renewed concerns about supply disruptions. Brent has risen more than 30% from its early-August lows.
US producer prices rose 0.4% in August and 5.4% from a year earlier, up from a 4.8% annual increase in July. Core PPI increased 0.2% from the previous month, below the 0.3% forecast, but the softer underlying reading did little to halt the selloff in bonds.
Joseph Brusuelas, RSM US LLP principal and chief economist, said the PPI sampling period ended Aug. 11, before the latest surge in crude, gasoline and diesel prices.
Brusuelas estimated current diesel prices were equivalent to crude trading near $207 a barrel and said higher energy costs could begin feeding through wholesale prices and core inflation during September.
He said the combination of inflation and energy prices strengthens the case for a Fed increase at its Sept. 15-16 meeting, with Friday's consumer-price report likely to shape the final decision.
The European Central Bank raised its deposit rate by 25 basis points to 2.5% on Sept. 10, its second increase this year, after the energy shock pushed euro-area inflation above 3%. The ECB now expects inflation to average 2.5% in 2027, up from its June projection of 2.3%.
The decision reinforced a global repricing already visible in sovereign debt, as investors demand higher yields while central banks confront another energy-driven inflation impulse.
The pressure shifted further into the bond market, where the 10-year Treasury yield moved toward 5% even after the government expanded an operation intended to improve liquidity in long-dated debt.
The 30-year yield reached 5.35% ahead of a new Treasury auction later on Sept. 10. The rise came a day after the Treasury tripled the size of its next long-end buyback to as much as $6 billion.
Brusuelas said the combination of inflation data, oil prices and global central-bank policy has put a near-term test of 5% on the 10-year yield “in the immediate offing.” He added that a hotter-than-expected CPI report on Sept. 11 could send it well beyond that level.
The 30-year auction now provides the first immediate test of whether investors are willing to absorb additional duration at current yields. Brusuelas said the move in the long bond ahead of the sale suggested the issuance could face a difficult reception.
A weak auction could extend the selloff before the Sept. 10 inflation report, while stronger demand could give the market some relief from the surge in long-term borrowing costs.
The two-year Treasury yield climbed to about 4.50%, nearly a percentage point above the top of the Fed's current 3.50%-3.75% target range as traders rebuilt expectations for further tightening.
That move quickly spilled into crypto derivatives.
More than 161,900 traders were liquidated over the previous 24 hours as crypto losses accelerated, with total forced position closures reaching about $568 million, CoinGlass data showed.
Bitcoin longs accounted for about $138 million of the total, while Ethereum longs lost another $113 million.
CryptoQuant data showed selling intensifying around the macro releases. Bitcoin taker sell volume on Binance surged above $1.4 billion within one hour as derivatives traders positioned for further declines or cut existing exposure.
More than $60 million of Bitcoin positions were liquidated during the same period.
The selloff has also pushed Bitcoin back into a price zone where recent buyers had been accumulating coins.
Glassnode data show supply building between roughly $76,000 and $82,000 beneath a much heavier long-term-holder block between $83,000 and $86,000, where about 1.07 million BTC were acquired.
That leaves the Sept. 10 decline testing a support cluster that formed during the latest recovery.
A sustained break below that area would weaken one of the buffers built underneath Bitcoin during the rebound. Glassnode places the deeper accumulation floor around $62,000 to $65,000, meaning a failure to hold the current cluster could expose substantially lower cost-basis support if the macro selloff persists.
Friday's CPI report is now the next test for that support.
Economists expect headline consumer prices to rise 0.4% in August and core prices to increase 0.2%. A stronger reading could reinforce expectations for a Fed hike and push the 10-year yield through 5%, adding pressure to Bitcoin while buyers defend the $76,000-$82,000 range.
But even the CPI report will capture only part of the latest energy surge.
More complete evidence of oil's move above $100 will arrive in subsequent inflation data, leaving traders to decide how much of September's price shock to discount before the official numbers catch up.
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