Bitcoin Climbs Amid Economic Uncertainty

Bitcoin (BTC) is up about 4% over the past week, trading around $115,400, as mixed economic signals create a complex backdrop. While this is positive for the digital asset, it highlights growing concerns in the broader economy.

Key Economic Drivers

Recent data has fueled expectations that the Federal Reserve might cut interest rates, making riskier assets like Bitcoin more attractive. Here's a breakdown:

• CPI Data: The headline Consumer Price Index rose 0.4% month-over-month in August, exceeding the expected 0.3%. This suggests inflation may be stickier than anticipated.
• Labor Market Stress: Jobless claims surged to 263,000, the highest since October 2021, and the U.S. added only 22,000 jobs in August, with unemployment climbing to 4.3%. Additionally, a massive downward revision of nearly 1 million jobs for the year ended March marks the largest in history.

Source: TradingEconomics

The combination of higher inflation and weaker job growth has led some to mention "stagflation" in economic discussions, raising alarms about the health of the U.S. economy.

Bitcoin's Price Action and Technicals

Despite economic headwinds, Bitcoin has shown resilience, approaching $116,000 and nearly closing the CME futures gap at $117,300 from August. The price action is constructive, with higher lows forming from a September bottom of $107,500.

Key technical indicators:

• The 200-day moving average has risen to $102,083.
• The Short-Term Holder Realized Price, a crucial support level in bull markets, hit a record high of $109,668.

Source: Glassnode

Traders are also bullish on equities, with the S&P 500 hitting record highs, driven by hopes of rate cuts.

Bitcoin-Linked Stocks: A Mixed Performance

While Bitcoin gained, related stocks showed varied results:

• MicroStrategy (MSTR): Flat for the week, underperforming Bitcoin year-to-date and testing key support levels. Its mNAV premium has compressed below 1.5x.
• Marathon Digital (MARA): Up 7%.
• CleanSpark (CEP): Up 4%.

Preferred stock issuance remains low, with only $17 million tapped this week, indicating most activity is through common shares.

Source: TradingView

Bullish Catalysts and Market Sentiment

The CME FedWatch Tool indicates traders expect a 25 basis-point rate cut in September and three cuts by year-end. This has improved risk sentiment, with the 10-year U.S. Treasury yield briefly falling below 4%.

However, the dollar index (DXY) is holding multiyear support, which could be a key inflection point to monitor.

Source: TradingView

Source: TradingView