Bitcoin Rises as Economic Strains Mount: Risk Assets Gain on Rate Cut Bets

Bitcoin (BTC) climbed above $116,000 on Friday, up roughly 4% over the past week, as weaker economic data fueled expectations that the Federal Reserve will cut interest rates on Wednesday. While positive for crypto, the data paints a more concerning picture for the U.S. economy.

Thursday’s CPI report showed inflation slightly higher than anticipated, suggesting price pressures remain sticky. Earlier in the week, job data revisions revealed that nearly 1 million fewer positions were created in the year ending March than previously reported—the largest downward revision in U.S. history. The monthly jobs report for August added just 22,000 positions, with unemployment rising to 4.3% and initial jobless claims hitting 263,000, the highest since October 2021. Rising inflation paired with softening employment is prompting renewed concerns about stagflation.

Against this backdrop, risk assets surged. Bitcoin’s price action remains constructive, forming higher lows from its September bottom near $107,500. The 200-day moving average stands at $102,083, and the Short-Term Holder Realized Price—a key support metric in bullish trends—reached a record $109,668.

Equities are also catching bids. The S&P 500 closed at record highs for the second day, reflecting optimism around an imminent rate cut. Treasury yields briefly dipped below 4% for the 10-year note, while the dollar index remains near multiyear support, signaling potential inflection points.

Bitcoin-linked stocks showed mixed performance. Strategy (MSTR) remained flat, testing long-term support near $326, below its 200-day moving average of $355. Meanwhile, rivals MARA Holdings (MARA) and XXI (CEP) posted weekly gains of 7% and 4%, respectively. Strategy’s mNAV premium has compressed to roughly 1.3–1.5x, with preferred stock issuance minimal at $17 million for the week. Options trading on perpetual preferred shares may provide additional dividend yield.

Traders continue to monitor Fed expectations closely. CME FedWatch shows a 25-basis-point cut priced in for September, with three cuts expected by year-end—supporting renewed risk appetite for Bitcoin, crypto equities, and other growth assets.