CoinShares says Bitcoin investors are trading the Fed rate path, not exiting crypto. Treasury buybacks and Sept. 16 FOMC odds at 60% are shaping BTC's $80K ceiling.
Bitcoin News
Bitcoin (BTC) has been stuck below $80,000 for weeks, and CoinShares says the Federal Reserve is the reason.
James Butterfill, head of research at CoinShares, wrote in his latest market update that "Bitcoin is trading like gold again, but the Fed still sets the ceiling." His conclusion was direct: investors are not leaving crypto. They are positioning around the rate path.
The evidence for that showed up clearly after Fed Chair Kevin Warsh spoke at Jackson Hole. Warsh said inflation progress had been modest and that price pressures were not easing fast enough to give policymakers confidence that inflation was returning to the 2% target. Roughly $100 million left digital asset investment products almost immediately after the speech, as markets sharply raised the probability of a September rate hike.
That outflow reversed just as quickly the following week. Flows into digital asset products reached $1 billion by Sept. 4. The turnaround came after Fed Governor Christopher Waller pointed to signs of disinflation and said he was inclined to hold rates steady in September if upcoming inflation data showed further progress. "Investors are not exiting the asset class," Butterfill wrote. "They are trading the rate path."
Treasury Buybacks Add Fuel to the Rally
As of Sept. 7, Fed Funds futures implied roughly a 60% probability of a 25-basis-point rate hike at the Sept. 16 Federal Open Market Committee meeting, according to CME Group. That single data point has kept BTC pinned near $80,000 despite continued demand from investors.
The rate sensitivity comes on top of a broader macro backdrop that drove BTC's August rally in the first place. The US Treasury announced plans to double certain long-dated bond buybacks from $2 billion to $4 billion per operation. BTC climbed from the low $60,000s to above $80,000 during the month. The expanded buyback program is scheduled to run from Sept. 9 through Nov. 4.
Related Article: Is 100K Bitcoin Up Next? Bear Market Fades as Debasement Trade Begins
21Shares co-founder Ophelia Snyder wrote in her Substack newsletter that equity sell-offs, yield curve shifts, and ongoing volatility from the US-Iran conflict all layered on top of the Treasury announcement during August. She said those factors together suggest the Bitcoin rally may have less to do with crypto-specific catalysts and more to do with growing interest in reducing exposure to US-specific risk.
That read was enough for Standard Chartered to forecast that BTC could reach $100,000 before the end of the year. Whether that happens may hinge on Friday's CPI print.
A soft core reading could give the Fed reason to hold rates, easing the pressure that has kept Bitcoin below $80,000. A hotter number would likely push the 60% hike probability higher and test BTC's support at $77,000 to $78,000.
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice. The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
