Bitcoin entered September with weaker momentum after posting strong gains of nearly 25% in August, with prices falling to around $77,132 as U.S. bond yields moved higher and military tensions between the United States and Iran intensified. The market had benefited last month from lower yields and easing monetary pressure, but investors are now reassessing the outlook as borrowing costs rise and concerns return that interest rates could remain elevated for longer.
Pressure on Bitcoin is not coming from a single factor. Escalating tensions in the Middle East pushed oil prices sharply higher, bringing inflation concerns back into focus. As energy prices climbed, government bond yields rose across several major markets, including the United States, Europe, Japan and Australia, reducing the appeal of assets that rely heavily on liquidity and investor risk appetite. Strategy returned to buying Bitcoin for the first time in two months, providing some psychological support, but the purchase was not enough to change the broader market direction amid stronger macroeconomic pressures.
The confrontation between Washington and Tehran has added another layer of uncertainty, particularly with few clear signs of deescalation and continued threats involving oil infrastructure and military bases across the region. Any widening of the conflict could keep energy prices elevated, directly affecting inflation expectations and the outlook for monetary policy. Markets have therefore started to increase expectations for a more restrictive Federal Reserve stance while inflation remains above the central bank’s 2% target.
This shift is particularly important for the cryptocurrency market because a significant part of Bitcoin’s August rally came alongside falling bond yields and improving liquidity conditions. As yields rise again, assets that do not generate regular income become relatively less attractive, particularly during periods of heightened uncertainty. This puts Friday’s U.S. nonfarm payrolls report firmly in focus, as continued strength in the labor market could give the Federal Reserve greater room to maintain a restrictive stance or even raise rates if inflationary pressures require further action.
Altcoins showed mixed performance, although the broader tone remained under pressure. Ethereum declined to $2,384, while Solana recorded modest losses. BNB and Cardano posted limited gains. These moves reflect a market that still lacks a clear direction following August’s strong performance, with investor decisions remaining closely linked to U.S. bond yields and expectations surrounding monetary policy.
Meanwhile, comments from New York Federal Reserve President John Williams offered a different interpretation of the rise in bond yields. Williams believes the increase in long term yields reflects the strength of the U.S. economy and an improving growth outlook, particularly as major investments continue to flow into artificial intelligence, data centers and technology infrastructure. At the same time, the Federal Reserve remains aware of inflationary pressure stemming from tariffs and the conflict in the Middle East, both of which are keeping inflation above the central bank’s target.
Williams also said inflation expectations remain contained and recent data point toward a more moderate path for price pressures, while the labor market continues to show stability. His comments suggest the Federal Reserve does not necessarily view higher yields as a negative signal, but policymakers are unlikely to rush into another policy move before receiving more economic data. For Bitcoin, this makes employment data, inflation readings and bond yield movements increasingly important. A return to lower yields could allow the cryptocurrency to regain momentum, while a sustained rise in yields may keep prices under pressure.
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