- Bitcoin fell below $110K as investors rushed into bonds and gold after weak U.S. labor data fueled recession fears.
- Treasurys surged, with yields dropping to four-month lows, while markets priced in a Fed rate cut this September.
- Bitcoin remains tied to tech stocks, but potential catalysts like Strategy’s S&P 500 inclusion could shift sentiment.
Bitcoin’s rally hit a wall on Thursday, as recession jitters sent traders scrambling for safety in government bonds and gold. The digital asset briefly slipped below $110,000, losing steam right when it looked ready to push higher. Gold, on the other hand, soared to a fresh all-time high—proof that fear is back in play.
Meanwhile, equities surprisingly held their ground. Stocks gained traction as markets bet on the Federal Reserve cutting rates soon, easing borrowing costs for households and businesses. But crypto didn’t get the same love. Unlike equities, Bitcoin isn’t directly tied to lower financing costs, leaving it exposed when risk sentiment takes a hit.
Treasury Yields Signal Risk Aversion
The rush into Treasurys was sharp. Yields on the U.S. 2-year dropped to 3.60%, their lowest in four months, as investors accepted smaller returns in exchange for safety. The trigger was weak labor data—ADP reported just 54,000 private payroll additions in August, compared to 106,000 in July. The ISM also flagged a contraction in employment, adding fuel to recession concerns.
Markets are now firmly expecting a 0.25% rate cut at the Fed’s September 16–17 meeting, which would lower the benchmark to 4.25%. Still, not everyone is convinced that this easing can last. According to the CME FedWatch tool, the share of traders betting on rates at or below 3.75% by early 2026 has dropped from 72% to 65% in just a month. Investors are clearly cautious, waiting for Friday’s jobs report before making bigger moves.
Bitcoin and Tech Stocks Move in Lockstep
For now, Bitcoin continues to shadow tech equities. Nasdaq’s 60-day correlation with BTC sits at 72%, showing just how tightly the two have been linked. Analysts warn that strong demand for bonds and gold highlights a persistent risk-off mood, which could keep weighing on Bitcoin.
That said, some potential catalysts could break the pattern. Strategy’s (MSTR) rumored inclusion in the S&P 500 is one example. If it happens, it could force institutional funds tracking the index to gain indirect exposure to Bitcoin—something that could change the narrative around the asset entirely.
Short-Term Pain, Long-Term Questions
Even with all the panic buying of Treasurys, longer-term fiscal cracks in the U.S. may eventually favor Bitcoin. Bank of America analysts expect the euro to strengthen against the dollar by 2026, pointing to trade tensions and shaky institutional credibility in the U.S. If faith in the greenback continues to erode, Bitcoin could benefit as an alternative.
For now though, Bitcoin may need to retest the $108,000 level as risk aversion dominates. Still, the appetite for short-term safety doesn’t necessarily mean crypto is doomed long term—it just shows how jittery the market has become.
