Bitcoin’s near-term path higher has become more difficult, although the longer-term setup may be improving, according to a report from CoinShares.

In a Friday note, James Butterfill, head of research at European asset manager CoinShares, said firmer-than-expected core inflation increases the likelihood of tighter Federal Reserve policy and could keep bitcoin below $80,000 for now.

However, Butterfill said the longer-term case for bitcoin may be supported by the U.S. Treasury’s bond buyback program failing to reduce long-term yields. That outcome could reinforce the debasement narrative that has supported both bitcoin and gold.

“The result is therefore a somewhat unusual policy mix for Bitcoin,” the report read. “Today’s CPI data is negative at the margin, increasing the probability of tighter monetary policy and potentially limiting the immediate upside.

“But the apparent failure of the Treasury’s current buying programme increases the likelihood of much more substantial intervention further ahead.”

The report continued: “If that happens, it could become one of the more powerful medium-term catalysts for Bitcoin.”

Data released Friday showed that the consumer price index excluding food and energy rose 0.3% in August from the previous month, exceeding expectations.

According to the CME FedWatch Tool, traders see an 85% chance that interest rates will be higher after the Federal Reserve’s meeting next week. The tool reflects market pricing in federal funds futures, rather than a guaranteed policy outcome. Bitcoin has historically performed well in a low-interest-rate environment.

At the same time, the Treasury’s expanded bond buyback program has so far failed to materially suppress long-term yields. If yields remain stubbornly high, Butterfill said pressure could build on Treasury Secretary Scott Bessent to expand the effort into a much larger, “bazooka-style” buying program designed to force borrowing costs lower.

Bitcoin recorded one of its strongest runs in years in August after Bessent announced that the department would double the size of its long-dated bond buybacks. The announcement and the subsequent rise in bitcoin’s price led some observers to argue that the widely discussed debasement trade had returned.

The debasement trade refers to investors buying an asset as a hedge against a loss in the value of a currency. Bitcoin and gold have both benefited from the trade as the dollar has weakened.

This article first appeared in Bitcoin Magazine and was written by Mathew Di Salvo.