Bitcoin’s August Surge Faces a New Threat From Rising Treasury Yields

Bitcoin dropped to around $77,500, giving back some of the nearly 25% advance it posted in August. The decline came as renewed U.S.-Iran military tensions pushed oil prices higher and Treasury yields climbed, strengthening expectations that the Federal Reserve could raise interest rates this month.

The pullback is testing whether Bitcoin’s August surge represented a lasting improvement in its macro setup or was largely driven by falling bond yields—a tailwind that has now reversed.

The U.S. and Iran exchanged another series of strikes overnight Tuesday as tensions continued to escalate around the Strait of Hormuz. President Donald Trump threatened to target Iran’s oil infrastructure, while Tehran warned that it could retaliate against American military positions across Gulf states.

Crude prices surged following the escalation, marking the most serious flare-up between the two countries in more than a month and reviving concerns that higher energy costs could fuel inflation worldwide. Bond yields climbed across Japan, Australia, the U.S. and Europe, while traders increased their expectations for a Federal Reserve rate hike at the September meeting. Inflation also remains above the Fed’s 2% annual target.

Bitcoin’s almost 25% August rally was driven largely by declining yields. Higher borrowing costs typically weigh on speculative investments such as Bitcoin, and the same bond-market dynamic that supported prices last month is now working in the opposite direction.

Strategy, the world’s largest corporate holder of Bitcoin, provided only modest support with its first BTC purchase in roughly two months. The limited impact of Strategy’s renewed buying highlights the strength of the current macro pressure, with interest rates and oil prices exerting greater influence on Bitcoin than corporate treasury demand.

The broader crypto market also moved lower. Major digital assets declined Wednesday after recording sizable gains in August, with virtually every leading token falling against the U.S. dollar.

Solana and the TRUMP memecoin suffered some of the steepest losses among major cryptocurrencies, while BNB was comparatively resilient, declining about 0.3%. The broad-based weakness across large-cap tokens and memecoins suggests a wider risk-off move rather than a problem tied to any particular blockchain or project.

Investors are now looking toward Friday’s U.S. nonfarm payrolls report for additional clues about the Federal Reserve’s policy direction. A stronger-than-expected labor-market reading could give policymakers more flexibility to raise rates, potentially adding further pressure from rising yields on Bitcoin and other risk-sensitive assets.

Conversely, weaker employment data could reduce expectations for a September rate increase and allow Treasury yields to retreat, potentially giving Bitcoin some of the support it enjoyed during August. For now, however, that remains a potential scenario rather than an established trend.

Until the jobs report arrives, Bitcoin is likely to remain highly sensitive to movements in crude oil and government bond yields. The ongoing U.S.-Iran tensions and the recent selloff in bond markets have made macroeconomic forces the dominant drivers of crypto prices.

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