Bitcoin Is Up 13% Since the Fed Hike. Here's Why the Funds That Sold Came Back

Bitcoin price is up about 13% since the Federal Reserve raised rates on September 16, and Wall Street funds did most of the buying. Three things brought them back.

The bad news was already in the price, higher rates stopped scaring buyers, and the chart showed room to rise.

The Bad News Was Already in the Bitcoin Price

Rate futures gave a hike 69.6% odds on September 11. On September 15, the CLARITY Act, a bill to set US crypto rules, failed a Senate vote 50-49. Bitcoin fell 3.3% that day and closed near $75,600, the low of the pattern's right shoulder.

A day later, the Fed raised its range to 3.75% and 4%.

Why the Funds Came Back

The first reason is that the waiting ended. Funds that had recorded heavy outflows ahead of the vote no longer had a decision to wait for.

The second is that higher rates stopped scaring buyers. The two-year Treasury yield, what the US government pays to borrow for two years, climbs when traders expect more Fed hikes and falls when they expect cuts. It hit a September high of 4.76% on September 18 and 21. Those were Bitcoin's two big up days. Fundstrat's Tom Lee argued the Fed cannot get more hawkish from here.

The third is room to run. The UTXO Realized Price Distribution (URPD) shows the price at which each Bitcoin last moved, a rough map of where holders bought. The band near $87,100 holds 1.34% of supply, and the band near $88,400 holds 0.46%.