Bitcoin could have more room to run if softer U.S. inflation keeps pressure on Treasury yields and the dollar.
The latest PCE report has traders dialing back expectations for further Fed rate hikes. Joel Kruger, global markets strategist at LMAX Group, said that shift is pulling yields lower and cutting into the dollar’s rate advantage.
That could give crypto markets some breathing room. Bitcoin has held up despite a period of strong demand for the dollar, which tends to make risk assets less attractive.
“If that headwind now eases alongside lower US yields, it could provide an additional tailwind for bitcoin and ETH by improving global financial conditions and reducing the relative appeal of holding cash in dollars,” Kruger said.
There are still risks, according to Fitch Ratings’ Olu Sonola, who said inflation remains around 3% or higher, while Truflation’s Oliver Rust sees energy prices and tariffs as key sources of price pressure.
That leaves bitcoin sensitive to the next inflation readings, oil prices and the Fed’s rate path.
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