Bitcoin breaks $85,000 in 8 months... What caused the sudden surge?

▲ Bitcoin (BTC) ©

Bitcoin (BTC) surged 5.6% in a single day, breaking past $85,000 for the first time in eight months. The simultaneous decline in international oil prices and US Treasury yields was identified as the key driver behind this rally, indicating a resurgence in demand for risk assets.

According to the investment media outlet The Motley Fool on September 22 (local time), Bitcoin rose 5.6% over the past 24 hours as of 1:25 PM ET on the 21st, reaching its highest level since the beginning of the year. Its price at the time was $85,395, having traded between $81,436 and $87,330 during the day. On the same day, the S&P 500 index and the Nasdaq Composite index also rose by 1.5% and 2.1% respectively, showing strength across risk assets.

The main reason for the rebound was the simultaneous drop in international oil prices and US Treasury yields. Last week, Brent crude, the international benchmark for oil prices, surged past $109 per barrel, reaching its highest level in several months. Concerns that rising oil prices could fuel inflation led to a rise in the US 10-year Treasury yield to 5.04%. As Bitcoin is considered a representative risk-on asset, rising Treasury yields have put pressure on its price.

The mood changed on Monday. Signals emerged that hostilities surrounding Iran could ease, causing Brent crude to fall below $100 per barrel, and the US 10-year Treasury yield also dropped to 4.96%. With the reduced interest rate burden, investors returned to risk assets, and Bitcoin surpassed $85,000 for the first time in eight months.

The Motley Fool noted that this surge demonstrates that Bitcoin's price is not solely driven by internal factors within the cryptocurrency market. Macroeconomic variables such as international oil prices, inflation expectations, and US Treasury yields significantly influence short-term price movements. A typical pattern is that Bitcoin strengthens when Treasury yields fall and is pressured when yields rise.

The outlet emphasized that the more important question is what role Bitcoin will play in investment portfolios over the next 5-10 years, rather than short-term price increases. Since this break above $85,000 was directly driven by the recovery of risk appetite due to falling international oil prices and Treasury yields, the impact of the macroeconomic environment on Bitcoin's price has once again been highlighted.

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