Bitcoin ETF faces Jackson Hole test after driving a 20% rally

Key Points

Although Bitcoin is currently fluctuating in the resistance range of US$80,000 to US$81,250 after briefly breaking through US$81,000, analysts pointed out that ETF demand, falling yields, a weakening US dollar and short covering have jointly driven this latest rally.

The next test is whether institutional inflows can be sustained and whether Federal Reserve Chairman Kevin Walsh will avoid making hawkish remarks at the Jackson Hole meeting.

Analysts said that Bitcoin's strong rebound was not driven by leverage alone. Inflows from compliant ETFs and improved macro environment also provided support for the rally, although excessive position expansion put the market under profit-taking pressure in the range of US$80,000 to US$85,000. Bitcoin is currently trading at approximately US$78,700, down 0.6% in 24 hours, having briefly exceeded US$81,000 before.

Bitcoin gains pause near resistance

The latest correction comes after Bitcoin's strongest weekly rally this year. Data showed that net inflows into U.S. spot bitcoin ETF were approximately US$1.9 billion last week, while the spot Ethereum ETF attracted US$697.2 million. The combined inflows of $2.6 billion were the best weekly performance in both categories since October 2025.

The macro background also played a boosting role. The U.S. Treasury Department said it will at least double the size of liquidity-backed repurchase of 10-to 20-year and 20-to 30-year long-term nominal interest-bearing securities from $2 billion to at least $4 billion, effective September 9. The decision eased pressure on long-term bonds and promoted "devaluation deals"-a market narrative for investors seeking scarce assets such as Bitcoin when market confidence in the purchasing power or fiscal stability of fiat currencies wanes.

Senior market analyst Daniela Hathorne said in a memo that Bitcoin is consolidating around $79,000 after "rising significantly" from below $65,000 last week. "The rally was supported by recovery in institutional demand, a weakening U.S. dollar, falling yields and renewed interest in devaluation trading following the Treasury's decision to increase long-term bond buybacks," she noted. She added that the technical structure is still improving, but Bitcoin has begun to appear overbought. "US$80,000 to US$81,250 is the direct resistance area and has attracted selling. A convincing breakthrough in this area will strengthen the case for further upside; and $78,000 is the first important support level." She said that if this level is lost, it may deepen the correction to the US$75,000 to US$77,000 range.

ETF demand becomes key signal

The composition of this rally is as important as its size. Bitcoin's previous surge was driven by short covering, but analysts said new ETF demand suggests a more permanent buyer base entering through compliant products. Investment strategist Can-Luca Köymen pointed out that spot Bitcoin ETFs attracted approximately $1.9 billion in five trading days, while Ethereum products attracted approximately $697 million. He said: "The composition of this round is as indicative as its size. Marginal buyers are entering through compliance products rather than leveraged tools." This is important because ETF demand can be more stable than futures driven short positions. Leverage-driven gains could quickly reverse once mandatory buying ends, while ETF inflows reflect increased exposure by asset allocators, advisers and institutions through compliance channels. "The next question is whether these inflows can be sustainable once the original macro catalysts fade," Köymen asked. He added that ETF traffic is now one of the best real-time indicators of long-term institutional needs.

Jackson Hole becomes macro test

The next big risk for the market is the Jackson Hole meeting. The Federal Reserve's schedule shows that Chairman Kevin Walsh will deliver a keynote speech at the 2026 Jackson Hole Economic Policy Symposium on August 28. Bitcoin has benefited from weakening expectations for further Fed tightening, but that could change if Washi highlights inflation risks. Investors are reportedly seeking clear signals from Wash's monetary policy strategy, while bond buybacks and inflation concerns have further complicated the interest rate outlook. Hathorne said a balanced statement that avoids implying interest rates could continue to suppress yields and the dollar, thereby supporting Bitcoin, while hawkish rhetoric could have the opposite effect, especially if positions have been overextended.

Stephen Wandek, director of strategy and revenue, said Bitcoin's 20% increase last week was not surprising, as exchange inventories were near historical lows and positive policy signals ignited short covering. "It's not easy to break through the $82,000 to $85,000 bitcoin price," he pointed out. However, he added that many holders have now returned to profitability and are less willing to sell. Options markets are also reflecting more aggressive bullish expectations. Wandek said that the December Bitcoin $100,000 call option, which traded at about $300 more than a week ago, is now close to $3000. "Traders are already positioned in the options market and expect a rise of about 16% in the next few weeks," he said.