Bitcoin fell on Friday after a better-than-expected labor report showed the U.S. job market accelerated in August, renewing investor attention on the Federal Reserve's next policy move.

The leading cryptocurrency was recently trading near $79,764, having dropped as low as $78,706 earlier in the morning in New York. It is currently down more than 1% over a 24-hour period. On Thursday, the coin had risen above $82,000. The pullback came as markets recalibrated expectations for monetary policy, since rate decisions ripple across risk assets broadly, from equities to crypto.

The Federal Reserve is typically more inclined to raise interest rates when the labor market is strong, since higher employment tends to increase spending, which in turn can push inflation upward. Higher rates also tend to raise the opportunity cost of holding non-yielding assets, which is one reason bitcoin has historically performed well in a low-interest-rate environment.

Federal Reserve Chair Kevin Warsh, delivering his first major speech last week as head of the U.S. central bank, said he had "more work to do" to fight inflation. Bitcoin has historically performed well in a low-interest-rate environment.

Traders currently see roughly a 50% to 60% probability of a Federal Reserve rate hike at the upcoming September 15–16 policy meeting — an outcome that would be closely watched by crypto markets after bitcoin's strong August run.

U.S. President Donald Trump, however, on Friday demanded that the Federal Reserve slash interest rates. Writing on his social media platform Truth Social, Trump said: "Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!"

He added: "We should have the LOWEST RATE of any country in the World, like 'the old days.'"

Bitcoin has recently decoupled from stocks as investors have renewed concerns around dollar debasement — a shift that has coincided with gold also drawing inflows amid similar concerns.

The cryptocurrency began surging last month after the U.S. Treasury Department said it would more than double the size of its government debt repurchases. The coin posted its best run in three years and its third-best August ever.

The so-called debasement trade — where investors buy an asset to hedge against a currency losing value — is back in the spotlight, and bitcoin has been trading in lockstep with gold, according to analysts.

News also emerged last month that U.S. public debt exceeded $40 trillion for the first time. Excessive debt undermines confidence in the dollar, making assets like bitcoin and gold attractive to investors. How the Fed weighs that backdrop against inflation pressures at its September meeting is likely to shape bitcoin's near-term direction, given the coin's sensitivity to rate expectations.

This post first appeared on Bitcoin Magazine and is written by Mathew Di Salvo.