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Bitcoin has pulled back roughly 10% from last month’s surge, settling around the $76,000 level. Soaring bond yields, driven by widening U.S. fiscal deficits and elevated crude oil prices, have intensified expectations of a Federal Reserve rate hike, pressuring risk assets across the board. Market participants increasingly anticipate that Treasury Secretary Scott Bessent will intervene in the bond market once again. If the Treasury ramps up short-term bill issuance and buys back longer-dated debt—effectively a form of quantitative easing—it could provide a tailwind for Bitcoin as investors price in currency debasement. Meanwhile, September has historically been a weak month for Bitcoin, and with geopolitical risks escalating, the battle around the $80,000 resistance level continues to define the market’s near-term direction.
Key Elements
Bitcoin has entered a correction phase of roughly 10% following last month’s sharp rally. Concerns that the U.S. fiscal deficit and expanding government debt are spiraling into a “death spiral” have gripped markets, with surging bond yields pressuring risk assets across the board. Investor attention is now squarely focused on whether Treasury Secretary Scott Bessent will step into the bond market once again.
Bitcoin has fallen from above $81,000 last month to around $76,000 per coin. Caution among traders regarding a potential global financial crisis is intensifying.
Ed Yardeni, president of Yardeni Research—who coined the term “bond vigilantes” in the 1980s—said the bond vigilantes are now running loose, pushing yields higher in protest against massive government deficits, ballooning government debt, and surging interest costs. He noted that if the U.S. 10-year Treasury yield reaches 5%, strong demand for bonds would emerge, including from Secretary Bessent. Yardeni predicts that if a sell-off panic needs to be averted, the Treasury Secretary will increase issuance of short-term bills and buy back longer-dated Treasuries.
Last month, Bessent’s surprise pledge to support the bond market—aimed at lowering borrowing costs—sent shockwaves through markets. Global bond yields surged again this week, with the U.S. 10-year Treasury yield hitting 4.814%, its highest level since November 2023.
Crude Oil Surge and Fed Rate Hike Expectations Weigh on Markets
The sharp rise in borrowing costs across the U.S. and other major economies is largely attributed to the spike in crude oil prices. Oil has returned to the $90-per-barrel level amid renewed concerns that a war between the U.S. and Iran is spiraling out of control.
As a result, market-implied odds of a Federal Reserve rate hike at the meeting two weeks from now have reached 70%, pressuring risk assets such as Bitcoin and cryptocurrencies while also dampening investor demand for gold.
Some market participants expect Bessent to intervene in the bond market again, which could potentially lift Bitcoin prices. Steven Coltman, head of macro at 21Shares, noted that Bessent’s intervention continues to serve as a critical signal that the administration will not hesitate to act to bring yields down ahead of the U.S. midterm elections. However, he added that the announced scale was clearly insufficient.
Coltman expects Bessent to escalate his offensive with further Treasury intervention in the coming weeks. He noted that funding Treasury bill sales to buy longer-dated bonds is essentially identical to quantitative easing—the mechanism by which the Fed issues bank reserves to purchase assets.
The Rise of the Debasement Trade
According to Coltman, this dynamic is already reflected in market behavior, with trades pricing in “debasement”—the dilution and decline of currency value—rising sharply. He said it is noteworthy that Bitcoin has remained remarkably resilient even as risk assets struggle, suggesting investors are increasingly pricing in additional measures to suppress yields and weaken the dollar.
During last month’s rally, approximately $3.5 billion flowed into U.S. Bitcoin exchange-traded funds (ETFs), the largest since July 2025. In one week of August alone, roughly $1.92 billion flowed in, with institutional capital serving as a key driver of price appreciation.
That rally was triggered by Bessent’s announcement that the U.S. Treasury would double its bond buyback program from $2 billion to at least $4 billion per operation. The move came as the 30-year Treasury yield reached its highest level in 19 years.
Furthermore, Bitcoin’s breakout above key resistance levels triggered a “short squeeze,” forcing investors who had bet on declines to cover their short positions. The resulting buybacks accelerated the price surge.
September Seasonality and Geopolitical Risks
Market participants remain wary of “Red September”—the traditional seasonal weakness for Bitcoin. In eight of the thirteen Septembers from 2013 through 2025, Bitcoin posted losses, with an average return of negative 2.97%.
Geopolitical risks have also escalated as U.S. airstrikes on Iran resumed after a hiatus of just over a month. In response, both 10-year and 30-year Treasury yields rose, and Brent crude futures for November delivery closed up 4.60% at $94.65 per barrel.
According to the CME FedWatch tool, interest rate futures markets are pricing in a 65.9% probability that the Fed will raise its benchmark rate by 25 basis points at the September FOMC meeting.
Market attention is now shifting to the upcoming U.S. jobs report. The U.S. Labor Department reported that July job openings totaled 7.271 million, below market expectations of 7.33 million and down from the prior month’s 7.359 million. If the slowdown in employment continues, the Fed’s room to hike rates could become limited.
Bitcoin’s rally has faced resistance near the $80,000 level, and market participants note that the sustainability of the rally is being tested. The trajectory of the bond market and Bessent’s next move are likely to continue shaping the direction of the cryptocurrency market in the near term.
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Source: finance.biggo.com