Bitcoin Rallies Reliant on Spot Demand Amid Fed Rate Hike Expectations

Bitcoin's rally has come under pressure as analysts point to sustained spot ETF demand as a key requirement for overcoming rising expectations of a September Federal Reserve rate hike.

The asset's latest advance has relied increasingly on spot demand rather than excessive leverage, leaving the market in a stronger position to absorb selling even as U.S. monetary conditions become less supportive.

Bitfinex analysts noted that while derivatives market open interest stood at $55.6 billion, more than 20% above its level at the start of August, the increase has been gradual and basis levels have remained relatively low.