Bitcoin Dips Following Unexpectedly High Inflation Data; Treasury’s Bessent Weighs in on Strategic Bitcoin Reserve
By Ines Ferré, Senior Business Reporter
August 15, 2025
Bitcoin experienced a notable decline on Friday, dropping nearly 2% from its record-breaking high reached on Thursday. The retreat came after inflation data released for July showed a hotter-than-expected print, which dampened hopes for a significant Federal Reserve interest rate cut in September. Adding to the bearish sentiment, U.S. Treasury Secretary Scott Bessent indicated that the government does not intend to purchase bitcoin for its strategic reserve, though confiscated crypto assets may contribute to building such a reserve.
Record Highs Amid Optimism Before Inflation Data
On Wednesday, bitcoin surged to an all-time peak of over $123,500 per token. This rally was fueled by optimism about looser monetary policy in the near term and signals of increasing corporate adoption of bitcoin as a reserve asset. Expectations had been building around potential Fed rate cuts, which generally support risk assets, including cryptocurrencies.
However, the release of July’s Producer Price Index, which came in considerably higher than anticipated, reversed some of that optimism. Inflation data plays a crucial role in shaping expectations about the Federal Reserve’s next moves on interest rates, and a hotter reading reduces the likelihood of aggressive rate cuts, leading investors to rethink risk exposure.
Bessent Comments on Bitcoin Strategic Reserve
In an interview with Fox Business, Treasury Secretary Scott Bessent shed light on the current state and future plans regarding a bitcoin strategic reserve for the United States. Bessent estimated that U.S. government bitcoin holdings—primarily from confiscated assets rather than purchases—stand at around $15 billion to $20 billion based on current prices.
He noted, “We’ve also started to get into the 21st century — a bitcoin strategic reserve. We’re not going to be buying that, but we are going to use confiscated assets and continue to build that up.”
Corporate Adoption and Market Drivers
The price rally this year has been driven partly by expectations of Federal Reserve rate cuts and by substantial bitcoin purchases from corporate treasuries. Multiple public companies have added bitcoin to their balance sheets, following in the footsteps of major players like software firm-turned-bitcoin-juggernaut MicroStrategy (MSTR). Additionally, increased inflows into spot exchange-traded funds (ETFs) linked to bitcoin have contributed to the bullish momentum.
Tom Essaye, founder of Sevens Report Research, highlighted the supportive environment, noting to Yahoo Finance that “The administration is pushing crypto. They are pushing bitcoin. Bitcoin is the lead dog in the crypto market.” Essaye acknowledged that while short-term price movements may be somewhat “frothy,” fundamental changes suggest a bullish outlook over the longer term.
Policy Moves Supporting Cryptocurrency
Last week, the Trump administration took a pro-crypto stance by issuing an executive order directing the Labor Department to explore ways to allow 401(k) retirement plans to include cryptocurrencies and other alternative assets. This initiative could significantly broaden retail investor access to the digital asset space.
Meanwhile, U.S. equities hit all-time record highs on the back of expectations that the Federal Reserve will ease monetary policy in the fall and speculation around the next Fed chair’s preferences. Such a broader risk-on environment tends to support cryptocurrencies like bitcoin and ethereum.
Ethereum Market Response
Ethereum (ETH-USD), the world’s second-largest cryptocurrency by market capitalization, also saw a pullback of over 2% on Friday after rallying close to record price levels. Interest in ethereum continues to grow due to its integral role in decentralized finance (DeFi) and as backing for digital assets such as stablecoins. Some companies have begun adding ether to their balance sheets as a way to gain exposure to this technological infrastructure.
The Road Ahead
While recent inflation data has injected caution into the crypto markets, many analysts maintain a cautiously optimistic outlook given ongoing institutional adoption and evolving policy frameworks. Bitcoin’s year-to-date gain remains a strong 25%, with an impressive 57% rally since hitting lows back in April. How the Federal Reserve ultimately moves with interest rate policy will remain a key driver for bitcoin and the wider digital asset market in the coming months.
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Ines Ferré is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre for more updates and analysis.
For ongoing coverage of the cryptocurrency market and financial news, visit Yahoo Finance.