Crypto fund flows are increasingly tied to the US interest-rate outlook, according to CoinShares research. The firm said Federal Reserve policy remains a key constraint on Bitcoin breaking above $80,000 even as demand for digital assets remains strong.
CoinShares head of research James Butterfill said Bitcoin is behaving more like gold, but that the Fed still sets a ceiling near $80,000. The sensitivity appeared after Fed Chair Kevin Warsh spoke at Jackson Hole, where he said inflation progress had been modest and price pressures were not easing quickly enough to give policymakers confidence that inflation is returning to the 2% target.
About $100 million left digital asset investment products immediately after the speech, as markets sharply raised the probability of a September rate hike. Flows reversed over the following week and reached $1 billion by Sept. 4, a turnaround that coincided with comments from Fed Governor Christopher Waller. Waller cited recent signs of disinflation and said he was inclined to keep rates steady in September if upcoming inflation data showed further progress.
Butterfill said investors were not leaving the asset class but were positioning around the rate path. As of Monday, Fed funds futures implied roughly a 60% chance of a rate hike after next week's Federal Open Market Committee meeting, according to CME Group. Markets were pricing in a 25 basis-point increase on Sept. 16. The movements suggest Bitcoin and broader digital asset markets remain sensitive to liquidity and monetary policy, with easier conditions historically supporting crypto and other risk assets.
The flows come after a strong rebound in Bitcoin and broader digital asset markets last month, when the US Treasury said it would double certain long-dated bond buybacks from $2 billion to $4 billion per operation. Bitcoin rose from the low $60,000s to above $80,000 during the month. The expanded buyback program is expected to run from Sept. 9 through Nov. 4.
21shares co-founder Ophelia Snyder said the period also saw equity selling and yield-curve shifts, alongside market swings tied to the Iran war and diplomacy. She said the current Bitcoin rally may reflect growing interest in reducing exposure to the US more than crypto-specific catalysts. Standard Chartered has forecast Bitcoin could reach $100,000 before the end of the year.
