Bitcoin Trading Like Gold Again, But Fed Still Sets Ceiling

Crypto fund flows are becoming increasingly sensitive to changes in the US interest-rate outlook, according to CoinShares. In his latest market update, CoinShares head of research James Butterfil argued that 'Bitcoin is trading like gold again, but the Fed still sets the ceiling' at around $80,000.

The sensitivity was evident after Fed Chair Kevin Warsh's speech at Jackson Hole, where he said progress on inflation had been modest and that price pressures were not easing quickly enough to give the central bank's policymakers the confidence inflation was returning to its 2% target. Roughly $100 million exited digital asset investment products immediately after the speech.

However, flows reversed over the following week, reaching $1 billion by Sept. 4, coinciding with comments from Fed Governor Christopher Waller, who pointed to recent signs of 'disinflation' and said he was inclined to keep rates steady in September if upcoming inflation data showed further progress.