Bitcoin Climbs as Economy Cracks — Is It Bullish or Bearish?

The U.S. economy is showing strain — yet Bitcoin is flexing its muscles. With inflation running hotter than expected and cracks widening in the labor market, Bitcoin surged above $116K this week, inching closer to the CME futures gap at $117,300.

So, is this strength a bullish signal for Bitcoin — or just a short-term sugar high from shaky macro conditions? Let’s unpack.

🔑 Key Points That Matter

1. Inflation vs. Jobs = Stagflation Worries

CPI beat expectations: +0.4% MoM vs. +0.3% forecast → Inflation is proving sticky.

Labour market is wobbling:

Nearly 1M fewer jobs than previously reported (largest downward revision ever).

August jobs: only 22,000 added, unemployment ticked up to 4.3%.

Jobless claims: 263,000, the highest since 2021.

Translation: Stagflation fears are back — weak jobs + persistent inflation = Fed boxed in.

2. Bitcoin Keeps Climbing

BTC topped $116K, up ~4% on the week.

Chart check: higher lows since $107,500 September bottom.

200-day moving average: rising to $102K.

Short-term holder cost basis: record high $109.6K, acting as strong support.

Conclusion: The trend still looks constructive.

3. Stocks & Risk Appetite Are Back

S&P 500 notched another record close — investors are already betting on rate cuts.

CME FedWatch: traders’ price in a 25bps cut this Wednesday, with 3 cuts expected by year-end.

The 10-year U.S. Treasury briefly dipped below 4% — risk-on sentiment is alive.

4. Crypto Stocks: A Mixed Bag

MSTR lagged, flat on the week and testing long-term support near $326.

MARA +7% and CEP +4% outperformed.

MSTR’s premium compressed (1.3–1.5x) as preferred stock issuance slowed, with options listing on its perpetual preferreds adding yield plays for investors.

🚦 So, Bullish or Bearish?

Bullish case:

BTC is holding higher lows, momentum is intact.

Fed rate cuts + falling yields could fuel another leg higher.

Risk sentiment across equities is supportive.

Bearish case:

Stagflation risks are real → If inflation proves too sticky, Fed may hesitate to cut aggressively.

If labour weakness accelerates, broader risk assets (including BTC) could take a hit.

📊 Bottom Line

Bitcoin is behaving like a risk-on barometer, thriving as traders front-run rate cuts. Technically, the uptrend looks solid, with $117,300 as the next test. But make no mistake — BTC’s rally is being built on cracks in the U.S. economy.

👉 Traders should watch Wednesday’s Fed decision and whether BTC can decisively break above the CME gap. If it does, the next big leg up could be in play.

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards.