Higher yields cap BTC upside, CPI could be key to the next move?

Bitcoin is edging lower amid low trading volumes owing to the U.S. Labor Day holiday. 

After rallying 3.4% last week to an almost four-month high of $81.4K, the largest cryptocurrency has eased back below $80K at the time of writing. 

Friday's stronger-than-expected U.S. jobs data lifted Treasury yields and the U.S. dollar, limiting gains in rate-sensitive assets such as gold and Bitcoin. 

162,000 jobs were added in the U.S. last month, while July data was also revised higher to 21,000 jobs created. The figures show that the U.S. jobs market remains resilient, meaning the Fed can focus on taming inflation, which remains consistently above the 2% target. 

With this in mind, attention will be firmly on U.S. PPI and CPI data this week for further clues over the likelihood of a Fed rate hike next week. 

The market is currently pricing in a 60% probability that the Fed will hike rates by 25 basis points at the September meeting, up from 50% ahead of the nonfarm payroll report. 

Inflation, Oil prices and ETF inflows 

Hotter-than-expected inflation could lift Treasury yields, raising Fed rate hike expectations and the U.S. dollar. This setup typically bodes poorly for Bitcoin. 

It's also worth keeping in mind that there's another inflation risk, and that's oil. Oil prices jumped almost 10% last week as hostilities in the Middle East intensified, lifting the risk premium on crude. Furthermore, attacks on tankers over the weekend in the Strait of Hormuz have increased concerns that the escalation could continue. 

Higher oil prices worsen global inflation, make it harder for central banks such as the Fed to cut rates, and could fuel rate-hike expectations. 

However, a softer inflation print could ease pressure on the Fed to tighten policy, weakening yields and improving the odds of Bitcoin breaking through key resistance around $82K and moving toward $90K. 

This is especially true given continued BTC ETF accumulation. According to SoSoValue data, BTC ETFs recorded $986.85 million in net inflows last week, marking the third straight week of net inflows. Persistent ETF inflows could help the price extend higher. 

Bitcoin technical analysis

After breaking above the 50 EMA, Bitcoin is consolidating between $77K, the 78.6% Fibonacci retracement of the $57.7K–$82.8K move, and the $81.5K resistance zone. The consolidation has also taken the RSI out of overbought territory, leaving room for further upside. The 50 EMA has crossed above the 100 EMA, a bullish signal, and appears on course to cross above the 200 EMA if gains continue, potentially forming a strong golden cross signal. 

Buyers will look to break above the $81.5K resistance zone to create a higher high and bring $90K into focus. Above here, attention turns to $95K. 

Support is seen around $77K. A break below this level would expose $73.4K, the 61.8% Fibonacci retracement, followed by the 200 EMA at $72.8K. Below here, $67.6K, the 38.2% Fibonacci retracement, comes into focus, ahead of $64K.