Bitcoin’s near-term upside could be capped below $80,000 by inflation

  • CoinShares researcher James Butterfill assessed Bitcoin’s near- and longer-term policy outlook.
  • Core CPI rose 0.3% in August, while FedWatch showed an 85% rate probability.
  • Treasury Secretary Scott Bessent announced doubled long-dated bond buybacks before Bitcoin’s August surge.

Bitcoin’s short-term outlook has weakened after core inflation exceeded expectations, increasing the likelihood of tighter Federal Reserve policy and potentially limiting the cryptocurrency below $80,000 for now. CoinShares Head of Research James Butterfill said the longer-term outlook could improve if the U.S. Treasury’s expanded bond buyback programme fails to reduce long-term yields. Such an outcome could increase pressure on Treasury Secretary Scott Bessent to pursue a much larger buying effort, potentially supporting the debasement trade (hedging against currency devaluation) that has benefited Bitcoin and gold. The consumer price index excluding food and energy rose 0.3% in August from July, while CME’s FedWatch tool put the probability of higher interest rates after next week’s Federal Reserve meeting at 85%. Bitcoin has generally performed well when interest rates are low. Bessent’s earlier announcement that the Treasury would double long-dated bond buybacks helped Bitcoin post one of its strongest August performances in years and revived discussion of the debasement trade.

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