After U.S. inflation data exceeded expectations, markets quickly raised their bets for a Fed interest rate hike in September. Affected by this, Bitcoin fell below $77,000 on Thursday, and risk assets as a whole came under pressure, with funds continuing to flow out of spot Bitcoin ETF.
Bitcoin once fell to around $76,748 on that day. In addition to the crypto market, major U.S. stock indices also weakened simultaneously, indicating a clear decline in investors' risk appetite.
PPI Data Boosts Expectations for Interest Rate Hikes
In the United States, in August PPI, there was a year-on-year increase of 5.4%, which is higher than the market expectation of 5.3%; there was also a month-on-month increase of 0.4%. After the data was released, traders further raised their expectations that the Federal Reserve would raise interest rates by at least 25 basis points at its meeting on September 16.
According to the CME FedWatch tool, the relevant probability rose to around 70% after the data was released, which is higher than the previous approximately 64%. Some other market indicators indicated even higher probabilities, close to 74%.
The market is now turning its attention to the CPI data to be released on Friday. If inflation continues to exceed expectations, the likelihood of a rate hike in September may further increase.
Oil prices and U.S. Treasury yields exert pressure
In addition to inflation data, rising energy prices have also added to market pressure. Due to concerns about supply triggered by the escalation of tensions in the Middle East, Brent crude oil broke through the $100 per barrel mark on Thursday, and US crude oil also reached this level.
Meanwhile, U.S. Treasury yields continued to rise. The yield on 10-year Treasuries climbed to around 4.92%, reaching a high since 2023; the yield on 2-year Treasuries rose to around 4.53%; and the yield on 30-year Treasuries briefly touched around 5.35%, the highest level since 2007.
An increase in yield rates typically enhances the attractiveness of risk-free assets, thereby squeezing the funding space for high-volatility assets. As a result, Bitcoin faces greater external pressure.
ETF has seen net outflows for two consecutive days
There has also been no improvement in the flow of institutional funds. US spot Bitcoin ETF has recorded net outflows for two consecutive trading days.
According to Onchain Lens data, on September 9th, there was a net outflow of $100.7 million from related products, and on September 8th, the net outflow was $46.6 million. The continuous withdrawal of funds has further weakened the short-term market sentiment.
In the traditional markets, the Dow Jones Industrial Average fell by about 0.7% during trading on Thursday, while both the S&P 500 Index and the Nasdaq Composite Index declined by around 0.6%. The European Central Bank raised interest rates by 25 basis points on the same day, which also reinforced the expectation that the global financial environment remains tight.
