CoinShares says Fed blocks bitcoin at $80,000, fund flows driven by rate outlook

U.S. Federal Reserve monetary policy has again come into focus as bitcoin struggles to break above $80,000.

CoinShares assessed that the Fed's interest-rate path is acting as a key factor capping bitcoin's upside, even as demand for crypto investment continues, Cointelegraph reported on Sept. 7 (local time).

CoinShares head of research James Butterfill said in a recent market update that bitcoin is trading like gold again, but the ceiling around $80,000 is still set by the Fed. That means liquidity and rate expectations, rather than bitcoin's price itself, are driving fund flows.

Market reaction was clear after the Jackson Hole meeting. Fed Chairman Kevin Warsh said progress on inflation was limited and price pressures were not easing fast enough. After comments that it was still too early for Fed policymakers to be confident inflation was returning to the 2 percent target, about $100 million immediately flowed out of digital asset investment products. The market then sharply raised the perceived odds of a September rate increase.

Fund flows then reversed. Inflows continued over the following week, recovering to $1 billion as of Sept. 4. During that period, Fed Governor Christopher Waller cited recent signs of easing inflation and said the Fed could lean toward holding rates in September if upcoming inflation data show further progress. As fears of a rate hike eased, appetite for risk assets also returned.