[Analysis] Bitcoin’s Break Above $80,000 Hinges on Fed Rate Policy

Bitcoin’s ability to break above $80,000 and extend its gains will hinge on the Federal Reserve’s interest-rate policy, according to a market analysis.

Cointelegraph reported on Sept. 8 that James Butterfill, head of research at CoinShares, wrote in a recent market report that “Bitcoin is trading like gold again, but the Fed is still capping gains at around $80,000.”

Flows into crypto investment products have also swung sharply with shifts in rate expectations. After Fed Chair Kevin Warsh said in his Jackson Hole speech that progress on inflation had been limited, the odds of a September rate increase rose. Roughly $100 million then flowed out of digital-asset investment products.

That trend quickly reversed. After Federal Reserve Governor Christopher Waller cited signs of disinflation and said he could support holding rates steady in September if inflation data cools further, inflows reached $1 billion through Sept. 4.

Butterfill said investors are not leaving the crypto market, but are trading based on the expected path of interest rates. Markets are currently pricing in about a 60% chance of a rate increase at the next Federal Open Market Committee meeting.

Liquidity conditions were also cited as a key variable for Bitcoin’s direction. After the U.S. Treasury said last month it would raise the size of some long-term Treasury buybacks to $4 billion from $2 billion per operation, Bitcoin climbed from the low-$60,000 range to above $80,000. The expanded buyback program is scheduled to run from Sept. 9 through Nov. 4.

CoinShares said recent fund-flow data suggests underlying demand for crypto assets has not weakened. Still, whether Bitcoin can sustain gains above $80,000 will depend heavily on macroeconomic conditions, including upcoming U.S. inflation data, the Fed’s rate decision and the broader liquidity environment.