Bitcoin Faces Rate Fears as ETF Demand Holds Steady
Bitcoin's recent rally is facing a fresh test as the cryptocurrency holds above $77,100 amid growing expectations for tighter U.S. monetary policy. The tension between fresh ETF demand and rising rate risks could shape Bitcoin's next move, according to Bitfinex Alpha.
The pullback in Bitcoin came after Federal Reserve Chair Kevin Warsh's remarks at Jackson Hole pushed markets to reassess the outlook for U.S. rates, raising the implied probability of a September rate increase from 35% to around 60%. Despite this shift, Bitcoin showed some resilience, closing Friday about 3% lower and remaining above previous range highs through the weekend.
Bitfinex identified $77,100 as an important volume-node support level after it helped define the cryptocurrency's August breakout. Continued ETF demand may have contributed to Bitcoin's resilience, with U.S. spot Bitcoin ETFs recording $924.5 million in net inflows last week despite $202 million leaving the products on Friday.
The Bitfinex report points directly to ETF demand as a key driver of Bitcoin's current liquidity conditions. On-chain data suggests a shift in Bitcoin ownership, with wallets holding 1,000 to 10,000 BTC reducing their balances by about 50,500 BTC since late June, while exchange and ETF custodial wallets have added roughly 59,100 BTC.