Bitcoin Holds Firm Around $84,000 as ETF Inflows Offset Oil Rally and Rising Yields

Bitcoin is trading firmly in the $84,000 range on September 25. While expectations for renewed U.S.-Iran peace negotiations have pushed oil prices lower, rising long-term U.S. Treasury yields are creating headwinds for risk assets, resulting in a directionless market. ETF inflows totaling $2.6 billion over the past five trading sessions are underpinning prices.

Falling Oil and Rising Yields in a Tug-of-War

Bitcoin briefly dipped below $83,000 in the afternoon the previous day, but selling pressure was short-lived, and the cryptocurrency largely consolidated in the $84,000 range. Fars News Agency, which is close to Iran's Islamic Revolutionary Guard Corps, suggested the possibility of expanding the battlefield beyond the Indian Ocean, driving oil prices higher and briefly pushing Bitcoin below $83,000 before it quickly recovered. During overseas trading hours, reports emerged that the U.S. and Iran were exploring a phased reopening of the Strait of Hormuz, and China's state broadcaster reported that President Xi Jinping had called for a resumption of U.S.-Iran talks. Oil prices subsequently fell back, and Bitcoin at one point approached $85,000.

However, a poorly received 7-year Treasury auction pushed long-term U.S. yields higher, offsetting the tailwind from falling oil prices. The U.S. 10-Year Treasury yield has surpassed 5%, reaching its highest level since 2007. Stronger-than-expected Purchasing Managers' Index (PMI) data, combined with hawkish remarks from Federal Reserve officials, has strengthened expectations for additional rate hikes. The Fed implemented a 25-basis-point rate hike the previous week, and markets are now pricing in roughly a 70% probability of another hike in October.