Bitcoin slips below $85,000 as 5% Treasury yield returns to haunt risk assets

Bitcoin dropped below the $85,000 level on September 23 following a surge in U.S. Treasury yields triggered by stronger‑than‑expected business activity data. The move erased the momentum of a recent rebound that had been fueled by short‑covering earlier in the week.

Market reaction and liquidations

Within an hour of the data release, crypto positions worth $135.8 million were liquidated, according to CoinGlass. Long positions accounted for $125.9 million of that amount, with Bitcoin losses of $47.4 million and Ether losses of $23.9 million. Over the preceding 24 hours, total trader losses reached $510 million across 122,256 accounts, with long traders losing $363.83 million.

Economic backdrop

The S&P Global flash purchasing managers’ indexes (PMI) for September showed a composite reading of 58.4, the highest in more than five years. The services index rose to 58.7 and manufacturing to 57, all above expectations. Analysts linked the readings to an implied annualized economic growth of about 5% and noted a steep rise in input costs—the strongest in four years—driven by higher oil prices and worsening supply‑chain bottlenecks.

Bond market response

U.S. Treasury yields reacted sharply. The 10‑year yield moved back above 5%, reaching levels not seen since 2007, while the two‑year yield hit its highest point in roughly 27 months. The rise in yields revived concerns about the amount of additional yield investors may demand to absorb growing U.S. government borrowing.

Implications for Bitcoin

The higher yields and robust economic data removed the short‑covering tailwind that had helped push Bitcoin above $86,000 earlier in the week. With bearish positioning largely cleared, Bitcoin now relies on fresh spot demand to regain the $85,000 threshold.