Key takeaways:
Rising demand for government bonds and gold underscores recession fears, limiting Bitcoin’s ability to sustain bullish momentum.
Correlation with equities remains high, but structural catalysts like Strategy’s S&P 500 inclusion could shift sentiment.
Bitcoin (BTC) failed to hold onto its bullish momentum on Thursday as traders fled toward the safety of government bonds after weaker-than-expected United States labor market data. This move drove gold to an all-time high and raised doubts over Bitcoin’s $108,000 level, with recession fears increasingly dominating investor sentiment.
Equities, however, responded positively. Market participants grew more confident that the US Federal Reserve would lower interest rates. In contrast, cryptocurrencies faced renewed pressure as BTC briefly traded under $110,000. Unlike digital assets, stocks benefit more directly from lower financing costs and reduced household debt burdens, both of which can stimulate consumption.
US 2-year Treasury yield. Source: TradingView / Cointelegraph
Yields on the 2-year US Treasury dropped to 3.60%, their lowest level in four months, signaling investors’ willingness to accept lower returns in exchange for safety. The surge in demand followed ADP’s Thursday report showing US private payrolls added 54,000 positions in August, a sharp decline from July’s 106,000. The Institute for Supply Management (ISM) also reported that overall employment contracted.
Consensus around the Sept. 16-17 Federal Open Market Committee (FOMC) meeting points to a 0.25% rate cut, bringing the benchmark down to 4.25%. Still, investors remain skeptical that the Federal Reserve can sustain such easing for long.
CME FedWatch implied interest rates for Jan. 2026. Source: CME FedWatch
The CME FedWatch tool shows that traders expecting January 2026 rates at 3.75% or lower declined to 65% from 72% a month ago. This gauge uses Fed Funds futures prices to calculate implied probabilities ahead of the Fed’s Jan. 28 meeting. Friday’s US Bureau of Labor Statistics report will be crucial in guiding positioning across risk assets.
Bitcoin remains highly…
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