Bitcoin slips below $85K as Treasury yields spike on strong US data
In brief
- Bitcoin fell below $85,000 on Sept. 23 after US PMI beat expectations and Treasury yields spiked above 5%
- Within one hour, $135.8 million in crypto positions liquidated, including $47.4 million from Bitcoin
- 10-year Treasury yield reached highest level since 2007, pressuring risk assets
- Long traders lost $363.83 million across 122,256 positions in 24 hours
- Strong business activity signals 5% annualized growth, complicating Fed rate-cut expectations
The Liquidation Wave
Within an hour of the S&P Global PMI release, $135.8 million of crypto positions were liquidated, with longs accounting for $125.9 million. Bitcoin accounted for $47.4 million of the wipeout, and Ether another $23.9 million. Over the past 24 hours, losses totaled $510 million across 122,256 traders, with long traders losing $363.83 million.
The sell-off reversed a bullish setup. Bitcoin pushed through $86,000 earlier in the week, forcing shorts to cover and accelerating Bitcoin toward $87,000. That momentum evaporated once the economic data landed.
Yields Spike as US Growth Accelerates
S&P Global's composite PMI climbed to 58.4 in September, its highest level in more than five years, while the services index rose to 58.7 and manufacturing reached 57, both above expectations. Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey is consistent with annualized economic growth of about 5%.
That hot reading sent the 10-year Treasury yield back above 5% to around levels last seen in 2007, while the two-year yield climbed to its highest level in about 27 months. Higher yields pressure leveraged trades across crypto and equities. They also raise the opportunity cost of holding zero-yield assets like Bitcoin.
Companies reported the steepest increase in input costs in four years as higher oil prices lifted fuel and transportation expenses, adding to inflation concerns that could keep the Fed from cutting rates as aggressively as markets had priced in.
The Structural Argument
higher yields can become self-reinforcing as rising interest costs increase the government's financing needs, requiring still more debt issuance
James Lavish, Co-Managing Partner of Bitcoin Opportunity Fund, argued that Treasury supply is increasingly colliding with investor concerns over structural dollar debasement. His point: the Fed's rate-hiking cycle may have hit a ceiling, and bond markets are now pricing in a longer period of elevated rates. Bitcoin traders had bet on rate cuts. Stronger growth data forces that narrative to reset.
Frequently asked questions
Why did Bitcoin fall below $85,000 on September 23?
Stronger-than-expected US business activity (PMI at 58.4, highest in 5+ years) sent Treasury yields above 5% for the first time since 2007. Higher yields pressure leveraged crypto positions and reduce the appeal of zero-yield assets like Bitcoin.
How much did crypto traders lose in the selloff?
Within an hour of the PMI release, $135.8 million in positions were liquidated. Over 24 hours, losses totaled $510 million across 122,256 traders, with long traders losing $363.83 million.
What does higher Treasury yield mean for Bitcoin?
Higher yields increase the opportunity cost of holding Bitcoin, which generates no interest or dividends. They also pressure leveraged trades. Rising yields can signal the Fed will keep rates higher for longer, undermining bets on aggressive rate cuts that had supported crypto prices.
