Bitcoin dropped below $80,000 on Friday following a stronger-than-expected U.S. labor report for August. The cryptocurrency traded near $79,764 after falling as low as $78,706 earlier in the day, down over 1% in the past 24 hours after climbing above $82,000 on Thursday.
The market reaction reflects investor concerns about monetary policy. A strong labor market typically increases the likelihood of Federal Reserve interest rate increases, as higher employment can drive inflation. Traders currently assess the probability of a rate hike at the September 15–16 Federal Reserve policy meeting at roughly 50% to 60%.
Federal Reserve Chair Kevin Warsh signaled last week that the central bank still has work ahead in combating inflation. Bitcoin has historically performed better in low-interest rate environments.
On Friday, U.S. President Donald Trump called for interest rate cuts, writing on Truth Social that the Federal Reserve should lower rates, stating the U.S. is a stronger credit and should have the lowest rate of any country.
Recent developments have refocused investor attention on the so-called debasement trade, where investors purchase assets like bitcoin and gold as hedges against currency depreciation. Bitcoin has recently decoupled from stocks and has been trading in lockstep with gold as these concerns resurface.
Contributing to this sentiment are recent fiscal developments: the U.S. Treasury announced it would more than double government debt repurchases last month, and U.S. public debt exceeded $40 trillion for the first time. Bitcoin experienced its best run in three years and its third-best August ever following the Treasury announcement.
