Bitcoin Price Fluctuates Amid Fed Expectations of Rate Hike

Bitcoin's price action this week was driven by Fed expectations, particularly after Federal Reserve Governor Christopher Waller's Jackson Hole speech on August 28-29. The speech led to a rebound in Bitcoin prices from $76K to $82.2K as the market interpreted it as dovish. However, before that, Warsh's hawkish tone had pushed September hike odds above 60%, sending Bitcoin prices down to $81K. Despite these fluctuations, our analysis suggests that the Fed will hold off on a rate hike in September.

The White House cannot afford a hike before the midterms, and supply-driven inflation is also a concern. Moreover, the bond market is already stretched, which adds to the likelihood of the Fed holding back. This view is supported by recent data showing that strategy-led decentralized autonomous tokens (DATs) have returned to the market, with single-day purchases reaching $630 million, their largest since June.

Spot Bitcoin ETF inflows are also on the rise, with $731 million pouring in on September 3 alone. This takes total net assets above $100 billion for the first time. Additionally, Robinhood Chain's daily volume has hit a record $1.5 to $1.6 billion, while Pons launched 25,000 tokens in a single day and out-earned Pump on fees.