Bitcoin (BTC), interest rate hike fears as it breaks $80,000... Will ETFs save it?

▲ Bitcoin (BTC), Wall Street/AI-generated image

Bitcoin (BTC) surged to $81,500 before being abruptly halted by concerns over interest rate hikes.

According to crypto media outlet Cryptopotato on September 1 (local time), Bitfinex analyzed that Bitcoin closed at $80,256 on August 27, surpassing $80,000 for the first time since May. The next day, it rose to $81,500 but subsequently fell to $76,857. This was influenced by a rapid shift in the US interest rate outlook following Federal Reserve (Fed) Chairman Kevin Warsh's remarks at Jackson Hole.

Warsh emphasized the Fed's 2% inflation target, suggesting that current monetary policy might not be sufficiently restrictive to curb inflation. The market-priced probability of an interest rate hike in September jumped from approximately 35% to 60%. Bitcoin, however, held at $77,100 thereafter. Bitfinex identified this price as a key support level, where the most trading volume accumulated after breaking out of the summer consolidation range.

Buying pressure from US spot Bitcoin ETFs is providing resilience against interest rate pressures. Last week's net inflow recorded $924.5 million. On August 28, $201.9 million flowed out, ending a nine-consecutive-trading-day streak of net inflows, but the preceding nine trading days saw $3.04 billion flow in. Net inflows over the past two weeks also reached $2.8 billion. During the same period, stablecoin supply increased by approximately $1.4 billion to $304.59 billion.

In the derivatives market, clear signs of excessive leverage are not yet apparent. Bitcoin perpetual futures open interest increased by over 20% since early August to $55.6 billion. However, Bitfinex explained that the rate of increase in open interest has been moderate, and the futures basis remains at a low level compared to the past. Bitfinex stated, “Despite large short position liquidations, open interest has gradually increased, and the basis has maintained historically healthy levels.”

The holders are also changing. Wallets holding 1,000-10,000 BTC have reduced their holdings by approximately 50,500 BTC since the end of June. Conversely, exchange and ETF-related custodial wallets have increased their holdings by approximately 59,100 BTC. In the recent August rally alone, custodial wallet holdings increased by 31,500 BTC. Bitfinex analyzed that whether funds continue to flow into ETFs and stablecoins, even with rising interest rate hike possibilities, will be a key indicator for gauging Bitcoin's upward trend.

[Key Article Summary]

-Bitcoin rose to $81,500 but then fell to $76,857 after hawkish signals from the Fed.

-The probability of a September interest rate hike jumped from approximately 35% to 60%, but US spot Bitcoin ETFs saw net inflows of $924.5 million last week.

-Bitfinex identified the sustainability of the $77,100 support level and continued inflows into ETFs and stablecoins as key variables.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*