Bitcoin edged higher Thursday, going above $84,000 as stubbornly elevated U.S. Treasury yields turned slightly lower while remaining near record-levels.
The flagship cryptocurrency was 1.2% higher at $84,623 on Thursday. Bitcoin had briefly spiked above $85,000 on Wednesday--fueled by a positive reaction to the Federal Reserve's latest inflation figures--before reversing gains as Treasury yields hit fresh multidecade highs.
Since then, Treasury yields have inched back. The 10-year yield fell 0.0059 points to 5.233%, while the 30-year fell 0.0036 points to 5.602%.
The stronger U.S. dollar rose to a three-month high against a basket of currencies on Thursday. Higher yields and a stronger dollar tends to pressure risk assets including crypto.
The Federal Reserve's preferred inflation gauge, released Wednesday, showed a significant slowdown in price increases over the 12 months through August. A softer-than-expected inflation reading tends to temper investor expectations for further interest-rate hikes, boosting risk assets.
Whether or not the Federal Reserve raises interest rates in its October meeting is arguably a key focus for cryptocurrency traders - although others say ETF inflows and retail demand are still the more important factor. "What October settles is not whether the backdrop is hostile, it is whether that bid is deep enough to keep paying for it," Bitfinex analysts said in a note.
Net inflows by bitcoin ETFs were interrupted Wednesday, marking the first net outflow day for fund traders since Sep. 16. Outflow was seen at $148.7 million, according to data from Coinglass.
Citi boosted its 12-month bitcoin target price to $113,000 from $82,000 amid renewed investor concern that high government deficits could erode the value of fiat currencies, along with regulatory uncertainty. "Paradoxically, the failure of the Clarity Act which spurred agency rulemaking, helped crypto regain technical levels," the analysts wrote. Citi added that exchange-traded fund inflows should be relatively sticky and consistent as investors gradually adopt bitcoin into portfolios.