Fed Signals Key to Bitcoin Breaking $80K

The Bitcoin price has surged to $77,382, a nearly 7% increase in one day. However, analysts at CoinShares believe that breaking above $80,000 will be challenging until the Federal Reserve clearly signals it's done raising interest rates.

According to CoinShares, the key level of $80,000 could be difficult to break due to Bitcoin's sensitivity to changes in market liquidity and borrowing costs. The firm notes that the rally has been driven mainly by changes in the wider economy rather than new developments within the crypto market.

The recent soft U.S. inflation and weaker payroll data have reduced expectations for more rate hikes, giving Bitcoin room to recover. CoinShares also points out that short-term U.S. Treasury yields have fallen, suggesting investors are no longer expecting the Federal Reserve to raise rates again.

However, efforts by the Treasury to support the longer-term bond market may only provide temporary relief, according to CoinShares. The firm warns that such moves could push more government debt toward shorter maturities and make borrowing costs more sensitive to future Fed decisions.