Bitcoin Stuck Below $80K as Fed Rate Expectations Drive Fund Flows: CoinShares

Bitcoin's struggle to break above $80,000 is being driven by shifting expectations around Federal Reserve policy rather than a broader exodus from crypto, according to a new CoinShares report. Head of research James Butterfill argued that Bitcoin is once again "trading like gold," with the Fed effectively setting a ceiling near $80,000 as monetary policy remains the dominant factor for institutional positioning.

The sensitivity was on full display after Fed Chair Kevin Warsh's speech at Jackson Hole, where he signaled that progress on inflation had been modest and that price pressures were not easing quickly enough to justify confidence in a return to the 2% target. Roughly $100 million exited digital asset investment products immediately after the remarks, as markets sharply repriced the probability of a September rate hike. Sentiment reversed within days, with flows swinging back to roughly $1 billion in net inflows by Sept. 4, following comments from Fed Governor Christopher Waller pointing to renewed "disinflation" and supporting a hold in September.

"Investors are not exiting the asset class," Butterfill wrote. "They are trading the rate path." As of Monday, CME Group Fed Funds futures implied roughly a 60% chance of a 25 basis-point rate hike at the Sept. 16 FOMC meeting, underscoring how tightly crypto is now tethered to monetary policy signals.

The CoinShares assessment comes alongside a strong rebound in digital assets over the past month, fueled in part by the US Treasury's decision to double certain long-dated bond buybacks from $2 billion to $4 billion per operation. Bitcoin climbed from the low $60,000s to above $80,000 during that stretch, with the expanded buyback program scheduled to run from Sept. 9 through Nov. 4. Butterfill noted the moves were layered on top of equity sell-offs and shifting yields tied to the Iran conflict, leaving oil and equities swinging in tandem with broader risk sentiment.