Bitcoin's $85,500 Soft-Inflation Rally Fades as Bond Yields Stay High

Bitcoin (BTC) briefly surged to $85,500 following softer-than-expected inflation data, but the rally quickly lost momentum as bond yields remained stubbornly elevated. The cryptocurrency market initially reacted positively to signs of cooling inflation, with BTC spiking on hopes that the Federal Reserve might adopt a more dovish stance. However, rising Treasury yields continued to pressure risk assets, including Bitcoin, erasing most of the gains. Analysts note that the correlation between BTC and traditional financial markets remains strong, with bond market dynamics playing a key role in crypto price action. Traders are now watching upcoming economic data and Fed commentary for further direction. The failed breakout above $85,500 suggests resistance remains firm, and BTC may need a sustained drop in yields to mount a more durable rally.