Bitcoins could be sold for as little as $108K if traders choose bonds

Takeaways from the conference:

• Bitcoin is unable to maintain its bullish momentum due to the rising demand for gold, government bonds, and other assets.

• Correlation with equities remains high, but structural catalysts like Strategy’s S&P 500 inclusion could shift sentiment.

BitcoinBTCAfter weaker-than expected US labor market statistics, the bullish trend of gold failed to continue on Thursday. Traders fled into government bonds in search of safety. Gold reached a new high, and investors began to doubt Bitcoin’s level of $108,000. Fears about recession are now dominating the investor mood.

The market, on the other hand, responded positively. The market participants became more optimistic that the US Federal Reserve will lower interest rates. Unlike cryptocurrencies, which were under pressure when BTC traded briefly below $110,000. Unlike digital currencies, stocks are more likely to benefit from the lower costs of financing and the reduced burdens on household debt.

The yields of the US 2-year Treasury fell to 3.60 percent, which is their lowest in 4 months. This indicates that investors are willing to accept lower rates in exchange for security. ADP reported on Thursday that US private payrolls had added only 54,000 jobs in August. This is a significant decline from the 106,000 positions created in July. ISM, the Institute for Supply Management reported a contraction in overall employment.

The consensus around the Federal Open Market Committee meeting on September 16-17 points towards a rate reduction of 0.25%, which would bring the benchmark to 4.25%. Investors are still skeptical, however, that the Federal Reserve will be able to maintain such an easing.

CME FedWatch shows traders’ expectations for January 2026 interest rates of 3.75% and lower have declined from 72% to 65% a month prior. Fed Funds futures are used in this gauge to determine implied probabilities before the Fed’s meeting on Jan. 28, 2019. The US Bureau of Labor Statistics’ report on Friday will play a key role in helping to guide risk asset positioning.

Bitcoin is highly correlated with tech stocks

A rise in inflationary forces from lower capital costs may undermine the economic growth of a country, especially if import tariffs are in place. While lower interest rates might offer a short-term respite, the strong demand for short-term gold bonds and other assets highlights a persistent fear of risk, which may weigh on cryptocurrency. Nasdaq’s correlation of Bitcoin and Nasdaq over the past 60 days is at 72%. The two assets move together a lot.

Analysts are unsure what will break the pattern, but they do highlight some of its characteristics. potential addition of Strategy (MSTR) to the S&P 500. Meryem Habib, Bitpace’s Chief Revenue Officer, believes that this inclusion is a positive step. “cements the legitimacy of an entire asset class.” Such a move would force index funds and exchange-traded funds (ETFs) tracking the S&P 500 to purchase MSTR shares.

Related: Peter Thiel vs. Michael Saylor: Who’s making the smarter crypto treasury bet?

A scenario suggests that even with high demand for US government debt, the fiscal imbalances in the US could undermine confidence in its currency. historically favorable Bitcoin. According to Bank of America analyst, the euro is expected to strengthen in relation with the US dollar before 2026. citing The trade frictions that are affecting the credibility of institutions.

Bitcoin may retest $108,000 in the near term due to risk aversion. The growing demand for Treasurys with a short maturity should not, however, be considered a bearish sign.

The article does not provide legal advice or investment recommendations and it is intended for informational purposes only. These are solely the opinions, views, and thoughts of the author and may not reflect the opinions and views of Cointelegraph.