Bitcoin briefly rose above $60,000 after inflation-related remarks by the U.S. Federal Reserve (Fed), but the market is maintaining a cautious mood about the sustainability of the rebound.

On July 1 (local time), blockchain outlet Cointelegraph reported that bitcoin reacted higher even as concerns about Fed rate hikes and outflows from spot bitcoin exchange-traded funds (ETFs) continued.

The immediate trigger for the rebound was inflation-related remarks by Fed Chair Kevin Warsh. The market again reflected worries about entrenched inflation, but bitcoin showed short-term strength. Traders, however, see the growing appeal of fixed-income products as a continuing burden because bitcoin is an asset with no interest income.

U.S. 5-year Treasury yields rose to 4.22 percent. That means investors are demanding higher yields to hold Treasuries. Over the same period, the U.S. Treasury futures market priced a 64 percent chance of a rate hike by September. The more the market expects higher rates, the more relatively disadvantageous alternative assets such as bitcoin and gold become.

A stronger dollar is also cited as a burden. The dollar index neared its highest level in a year, and gold prices fell 12 percent over the past two months. By contrast, the Nasdaq 100 index rose 25 percent over the past three months, supported by strength in the artificial intelligence (AI) sector.

Not all tech stocks moved the same way. Shares of Micron and SanDisk fell more than 9 percent intraday on Wednesday. However, the iShares SOX Semiconductor ETF rose 78 percent over the past three months, making it hard to view it as a trend reversal for the semiconductor sector.

Flows within the crypto market are more conservative. Outflows from spot bitcoin ETFs are continuing. The market sees this trend as undermining bulls’ expectations and reinforcing a structure in which prices respond more sensitively to negative news. Bitcoin’s staying 53 percent below its all-time high also fails to boost confidence in support at $60,000.

Strategy is also a variable. Strategy said on June 30 it increased its cash proportion to restore dividend resources to the equivalent of 17 months. However, STRC, a floating-rate preferred share, traded still far below the $100 target needed for additional issuance. STRC’s dividend rate also rose to 12 percent from 11.5 percent, but that alone was not enough to attract more buyers.

In the end, the market is weighing bitcoin’s short-term rebound and its medium-term burdens at the same time. Bitcoin may have temporarily benefited from the Fed’s remarks reflecting persistent inflation concerns, but expectations for rate hikes and strong profit momentum in the AI sector could continue to put downward pressure on bitcoin. As a result, prospects have been raised that a sustainable rise to $65,000 could take longer than expected.