BTC Gains as Economic Data Weakens — Bull Market or Bear Trap?

Bitcoin Climbs Amid Weak U.S. Economic Data as Markets Eye Fed Rate Cut

Bitcoin (BTC) surged past $116,000 on Friday, up roughly 4% over the past week, as economic indicators pointed to a slowing U.S. economy and fueled expectations of a Federal Reserve rate cut this Wednesday. While this is positive for crypto, it underscores growing concerns about inflation and labor market weakness.

Thursday’s CPI report showed headline inflation slightly above expectations, suggesting price pressures remain persistent. Earlier, job revisions revealed nearly 1 million fewer positions created in the year ending March than previously reported—the largest downward revision in U.S. history. August’s jobs report 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 alongside weak employment has revived stagflation concerns.

Risk assets responded positively. Bitcoin’s price remains constructive, forming higher lows from its September bottom near $107,500. The 200-day moving average sits at $102,083, and the Short-Term Holder Realized Price reached a record $109,668.

Equities also gained, with the S&P 500 closing at record highs for the second consecutive day. Treasury yields fell, with the 10-year briefly dipping below 4%, while the dollar index held multiyear support levels.

Bitcoin-linked stocks were mixed. Strategy (MSTR) remained flat at $326, below its 200-day moving average of $355, while MARA Holdings (MARA) and XXI (CEP) gained 7% and 4%, respectively. Strategy’s mNAV premium is now roughly 1.3–1.5x, with minimal preferred stock issuance at $17 million this week. Options trading on perpetual preferred shares may provide additional yield.

Market sentiment is closely tied to Fed expectations. CME FedWatch shows a 25-basis-point cut is priced in for September, with three cuts expected by year-end, potentially boosting risk appetite for Bitcoin, crypto equities, and growth assets.

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