Bitcoin Falls 12% to $107K as Fed Rate Cut and Tariff Uncertainty Loom
Bitcoin stabilized on Wednesday after a wild week that saw prices drop to a two month low of $107,000, down 12%...
Quick overview
- Bitcoin stabilized at $107,000 after a 12% drop from mid-August highs amid cautious trading due to global market uncertainties.
- Despite a significant purchase of 4,048 Bitcoin by Strategy, investor sentiment remains risk-averse as broader market conditions are volatile.
- The upcoming US nonfarm payrolls report could influence Fed rate cut expectations, with a weak labor market raising concerns about economic resilience.
- Bitcoin's decline has mirrored the fall in US equities, highlighting its correlation with tech stocks as investors seek safety in gold and the US dollar.
Bitcoin stabilized on Wednesday after a wild week that saw prices drop to a two month low of $107,000, down 12% from the mid August high. Traders are still cautious as global markets deal with interest rate expectations, US trade tariffs and rising government debt risks.
Despite Strategy (formerly MicroStrategy, MSTR) buying 4,048 Bitcoin worth almost $450m last week, investors are still hesitant. The move showed corporate confidence in digital assets but broader market sentiment is risk off.
Adding to the pressure, World Liberty Financial, a crypto venture tied to former President Donald Trump, saw its tokens tank on debut this week, as politically connected digital assets are getting more volatile.
Fed Outlook and Labor Market
Markets are now looking to the US nonfarm payrolls report on Friday, a key indicator of labor strength. If the data is weak, the Fed may cut rates later this month, with CME FedWatch putting the probability of a 25 basis point cut at over 90%.
⚡ SEPTEMBER RATE CUTS = CRYPTO ROCKET FUEL ⚡
87% chance of Fed rate cut this month while crypto rallies across sectors 📊
Expectations of Fed rate cuts could push XRP up $10 according to insiders = Alt season loading 🚀
Historical data: Rate cuts boost Bitcoin 5-10%…
— Alina (@Alina4ever7) September 3, 2025
But a soft labor market is a broader risk, and raises questions about the resilience of the US economy. Weak PMI readings for August only added to the fears of slowing growth.
Investors are also digesting an appeals court ruling that most of Trump’s trade tariffs are illegal and must be withdrawn by October 14. Trump said he will appeal, adding more legal uncertainty to already tense trade dynamics.
Key Drivers of Sentiment:
- Rising global bond yields due to high government debt.
- Fed rate cut expectations as US data weakens.
- Legal battles over US tariffs and Fed appointments.
Bitcoin’s Correlation With Tech Stocks
Bitcoin’s drop mirrored the fall in US equities, particularly the NASDAQ Composite, as risk assets struggled with higher yields. Bitcoin is often traded with growth stocks, and is reflecting broader market unease.
Safe-haven assets, gold and the US dollar, outperformed Bitcoin this week as investors are seeking safety in uncertain times. With global debt worries rising and monetary policy up in the air, traders will be defensive in the short term.
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