Bitcoin (BTC) climbed approximately 4% on Thursday, trading above $80,000 for the first time since August 28, as market expectations for a September Federal Reserve rate hike eased following remarks from Fed Governor Christopher Waller. According to CME FedWatch, the probability of a rate increase this month fell to 48%, down sharply from nearly 70% just a day earlier.
Waller indicated that if next week's August consumer price index (CPI) report shows continued progress on underlying inflation, he would favor keeping interest rates unchanged at the upcoming Federal Open Market Committee meeting. He noted that underlying inflation appears to be performing better than headline core figures suggest, and he downplayed concerns that elevated energy prices and tariffs would cause persistent inflation pressure.
"My earlier worry that higher energy prices would bleed into many goods and services prices hasn't come to pass," Waller said in a speech. He also stated he was not expecting significant information from the following day's employment report but would be closely monitoring the August CPI data. If the report demonstrates "continued progress" toward the Fed's 2% target, he would support holding rates steady in September. However, his comments leave the door open for a hike if inflation data disappoints, keeping monetary policy data-dependent.
The shift in rate expectations provided a tailwind for risk assets, with Bitcoin leading gains. The cryptocurrency's move back above $80,000 comes after a 25% rally in August, followed by a pullback toward $76,000. Glassnode analysts noted that Bitcoin's 30-day correlation with the S&P 500 moved toward zero during August's rally, suggesting a decoupling from equities. They observed that similar periods of decoupling during sovereign bond selloffs have historically been short-lived.
Bitcoin's relationship with gold has also strengthened. Data from Bitwise showed the 90-day correlation between the two assets reaching a nearly six-year high. Bitwise Europe research director André Dragosch highlighted that Bitcoin gained 22.4% in the week following a rise in longer-dated U.S. Treasury yields, while gold gained about 5% and stocks declined. The last comparable correlation reading occurred in 2020 during the COVID-19 crisis and the subsequent fiscal and monetary stimulus. Dragosch noted that when macroeconomic forces dominate, investors increasingly treat Bitcoin and gold similarly amid concerns about currency debasement. Bitcoin was also negatively correlated with the U.S. Dollar Index at the end of August, according to Bitwise.
From a technical perspective, Glassnode identified a long-term holder supply cluster between $83,000 and $86,000, which could act as resistance. The main accumulation floor is seen between $62,000 and $65,000. At around $78,000, 68% of Bitcoin supply was in profit, compared with 65% when Bitcoin traded at similar levels in May. Spot Bitcoin ETFs recorded average daily inflows of $290 million at the height of the rally, with daily ETF trading volume remaining near $3 billion.
Market analyst Erik Crown suggested that Bitcoin could reach $90,000 by October if September proves positive. He pointed to historical periods of extreme investor apathy before major reversals and noted that Bitcoin's historical returns after trading more than 50% below its previous high support the possibility of further gains. As the market digests Fed signals and inflation data, Bitcoin's trajectory remains closely tied to macroeconomic developments.
This article is for informational purposes only and does not constitute financial advice.
