The safe-haven narrative is returning to financial markets amid renewed geopolitical tensions and rising interest rate expectations, creating a complex macro backdrop for risk assets. Bitcoin is showing potential as a store of value, with its correlation to gold increasing to 50% while its link to tech stocks has fallen to 30%. The Fed is scheduled to purchase $12.5 billion in U.S. Treasury debt, which could inject liquidity, even as the 10-year Treasury yield hit 4.79%. This conflicting setup places Bitcoin at a critical juncture, where its shifting correlations may determine whether it can outperform during a broader risk-off move.
Safe-haven flows are back in the spotlight as oil prices regained $90 per barrel, driven by new tensions between the U.S. and Iran. The market is pricing in a 60% probability of a rate hike at the upcoming Federal Open Market Committee meeting.
The U.S. 10-year Treasury yield jumped to 4.79% on September 1st, a level not seen since January 2025. This implies rising rate expectations and tighter financial conditions that could further pressure risk assets.
This poses a critical juncture for Bitcoin (BTC). To complicate matters, the Federal Reserve is set to purchase $12.5 billion in U.S. Treasury debt, a move different from quantitative easing that should inject some liquidity into the market.
A conflicting setup emerges for Bitcoin as rising yields pose a tightening of liquidity, while the Fed’s Treasury purchase could offer support. According to Grayscale’s analysis, BTC’s correlation with the Nasdaq has dropped to 30% from 60%, and its correlation with gold has climbed to 50%.
This suggests Bitcoin is increasingly diverging from traditional risk assets and gravitating towards the safe-haven trade. The XAU/BTC ratio is up more than 1.2% so far this month, nearing a key support level and indicating a strong preference for Bitcoin over gold.
The growing correlation between the two can boost the bullish scenario for Bitcoin. Capital is rotating back into traditional safe-haven assets like Treasuries, which should support such assets further if the liquidity injection from the Fed’s action eases financial conditions.
Under these conditions, Bitcoin is demonstrating more safe-haven characteristics. With the BTC/XAU ratio skewed to the benefit of Bitcoin, it should outperform other risky assets in the case of a generalized risk-off scenario.
