Bitcoin slips under $85,000 as 10-year yield tops 5%

Bitcoin dropped below $85,000 on Sept. 23 after S&P Global’s September purchasing managers’ indexes came in stronger than expected and the 10-year Treasury yield rose above 5%. The spike in yields coincided with rapid liquidations of leveraged crypto positions.

S&P Global’s flash PMI data showed a composite reading of 58.4 for September, the highest in more than five years, with the services index at 58.7 and manufacturing at 57. S&P Global economist Chris Williamson estimated the survey is consistent with roughly 5% annualized growth and about 4% growth for the third quarter. He also noted companies reported the steepest rise in input costs in four years, driven by higher oil prices and worsening supply-chain backlogs. “While this accumulation of uncompleted orders bodes well for the further expansion of output and capacity in the coming months, it also indicates that companies are developing more pricing power, and hence is a worry for the inflation outlook,” Williamson wrote.

The 10-year Treasury yield moved back above 5%, reaching levels last seen in 2007. The two-year yield climbed to its highest in about 27 months. Bond market moves coincided with a pullback in risk assets and a decline in demand for positions financed with leverage.

Within an hour of the PMI release, CoinGlass recorded $135.8 million in liquidations across the crypto market, with $125.9 million coming from long positions. Bitcoin accounted for about $47.4 million of those liquidations and Ether about $23.9 million. Over the past 24 hours, liquidations totaled roughly $510 million across 122,256 traders, with long traders incurring around $363.83 million in losses.

Earlier in the week Bitcoin’s rally had been supported by a short squeeze that pushed prices through a large cluster of short positions and toward $87,000. The PMI-driven rise in yields removed that short-covering tailwind, leaving the market dependent on new spot buying to push prices back above $85,000.

James Lavish, co-managing partner of Bitcoin Opportunity Fund, warned that rising Treasury issuance is colliding with investor concerns over structural dollar debasement. He cautioned higher yields could become self-reinforcing as increased interest costs raise government financing needs and require more debt issuance, and that any policy steps to absorb that debt could deepen currency concerns, creating a “self-reinforcing loop.”

Traders and funds are monitoring upcoming economic data and Treasury market moves for signs of further volatility as markets adjust to higher yields and the updated growth and inflation signals from the PMI report.