Bitcoin Drop to $108K? Investors Flock to Safer Bets!

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Key takeaways:

  • Everyone’s rushing to government bonds and gold, clearly panicking about recession-poor Bitcoin can’t catch a break.

  • Stocks seem fine, but Bitcoin’s still tied to equities like a needy ex. Maybe Strategy’s S&P 500 fame will turn the tide?

On Thursday, Bitcoin (BTC) took a tumble as traders sought refuge in the oh-so-safe arms of government bonds, triggered by the US labor market data that didn’t meet expectations. Gold soared to new heights, and the $108,000 Bitcoin dream? Yeah, it looks pretty shaky now, as recession fears spread like wildfire across the investment world.

Stocks, on the other hand, threw a little party, with investors getting all giddy thinking the US Federal Reserve might lower interest rates. Bitcoin? Not invited to the celebration. BTC briefly dipped below $110,000, as if to say, “Hey, remember me?” It turns out, stocks get a better deal from lower rates since they get to play with cheaper financing and lower household debt. Cryptos? Not so much.

The 2-year US Treasury yields dropped to 3.60%, their lowest in four months. Translation? Investors are willing to take a little less cash now, just to keep their money safe. The ADP report showed US private payrolls added just 54,000 jobs in August-barely a blip compared to July’s 106,000. Employment? Yeah, it’s not looking hot.

Most people think that the Fed will cut rates by 0.25% in the Sept. 16-17 meeting, dropping the benchmark to 4.25%. Still, there’s a big “meh” from investors, wondering if the Fed will be able to keep easing for long.

The CME FedWatch tool, which is basically the “we’ve got a crystal ball” of financial forecasting, shows a drop in traders expecting a 3.75% rate for January 2026, down to 65% from 72% last month. In layman’s terms: things are shaky, and Friday’s job report will probably shake things up even more.

Bitcoin Sticks to Tech Stocks Like Glue

Inflation might rise thanks to those sweet low capital costs, and with tariffs on imports still looming, Bitcoin’s future could look even more uncertain. For now, though, Bitcoin’s holding hands with tech stocks like they’re going steady. The 60-day correlation with Nasdaq sits at a cozy 72%, meaning they pretty much move in sync-when one gets the flu, the other catches it, too.

What could break this lovey-dovey relationship? Well, some analysts are eyeing the possible addition of Strategy (MSTR) to the S&P 500. Apparently, this could legitimize Bitcoin in the eyes of the financial world. According to Meryem Habibi at Bitpace, such a move would force index funds and ETFs to buy MSTR shares, potentially giving Bitcoin some much-needed street cred.

In the short term, Bitcoin might dip back to test that $108,000 mark as risk aversion runs high. But let’s not forget: short-term Treasury demand alone isn’t necessarily a long-term bearish signal.

Just a friendly reminder: this article isn’t investment advice. Do your own research, and if you lose money, don’t come crying to us. 😜

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2025-09-05 00:21