Bitcoin struggles at $80,000, risk of Fed interest rate hikes rises, ETF inflows remain stable

Bitcoin is struggling at the US$80,000 mark, and expectations of a Fed interest rate hike are rising with the inflow of ETF funds.

On September 4, Bitcoin prices fluctuated around US$79,000 after a turbulent 24-hour trading. During this period, the price of this leading cryptocurrency briefly exceeded $81,000, but failed to maintain its gains. The price correction came after analysts were surprised by U.S. employment data in August, further fueling expectations that the Federal Reserve will adopt a stricter stance on interest rates.

Impact of employment data on bitcoin volatility

The August employment report showed that the U.S. economy added 162,000 new jobs, almost triple the 56,000 economists had forecast. The unemployment rate remained at 4.1%, and average hourly wages increased 0.3% from July and 3.1% year-on-year. It is worth noting that employment in July was also revised to an increase of 21,000 from a previous decline.

After the release of employment data, the market expects the probability of the Federal Reserve raising interest rates at its September 16 policy meeting to climb to 62%, as strong hiring data provides more room for policymakers to maintain current restrictive monetary policy. As a result, Bitcoin, which had previously rebounded from below $78,000 to briefly hit around $82,000, fell back below $80,000 again. Over the past week, the currency's performance has been broadly flat.

Recent employment data has sparked speculation that the Federal Reserve may raise interest rates in September, putting pressure on Bitcoin after it failed to hold above $80,000.

Market Drivers: Federal Reserve Expectations and ETF Fund Inflows

Bitcoin's first breakthrough of $80,000 came in part from remarks by Federal Reserve Governor Christopher Waller. He hinted that if inflation data showed signs of improvement, he might support keeping interest rates unchanged at the central bank's next meeting. His remarks briefly raised market expectations that interest rates would remain unchanged, helping cryptocurrencies and other risky assets regain their vitality.

Another strong factor supporting bitcoin prices comes from demand from spot exchange-traded funds (ETFs). According to SoValue, on September 3, the U.S. spot Bitcoin ETF recorded a record net inflow of US$731 million, the largest one-day inflow since January. Among them, BlackRock's IBIT contributed $454 million.

However, macroeconomic sentiment quickly shifted again after the positive jobs report, putting pressure on risky assets. Bitcoin's ability to maintain the $80,000 level is being challenged by these opposing forces: strong ETF buying on the one hand, and renewed interest rate risk ahead of the Fed's policy decision.

Investors are now closely watching upcoming economic data, especially the U.S. inflation reading scheduled for September 11. Waller has previously said further improvements in inflation data will support his view of keeping interest rates unchanged, giving the next release of the consumer price index (CPI) additional importance.

Regulatory developments may also drive market sentiment. The U.S. Senate is expected to hold a procedural vote on September 15 on the CLARITY Act, a proposed bill that affects the regulation of cryptocurrencies. A subsequent policy meeting of the Federal Reserve and comments from Chairman Kevin Warsh are expected on September 16.

In the coming days, ETF capital flows are likely to continue to be a market driver for influencing. Continued inflows could help Bitcoin recover lost ground, while new outflows could hinder its ability to build effective support above $80,000.

BTC Price Trend Analysis: Technical Outlook

Bitcoin's daily chart shows that the price is hovering around US$79,000 after its intraday high broke through US$81,400. This level remains significant because the US$80,000 area has not yet been clearly established as a support level. Despite recent rejections, Bitcoin retained the gains it gained when it broke through in the $63,000 - 65,000 range in August.

All major simple moving averages (SMA) are well below current prices, with Bitcoin trading about 13% above the highest SMA, which keeps the daily trend positive but lacks substantial short-term support below.

The momentum indicator strengthens this mixed situation. Aroon's rising indicator is at 92.86%, while Aroon's declining indicator has dropped to 0%. This suggests that the uptrend is still intact, although momentum has cooled-evidence that the Commodity Channel Index (CCI) has now fallen back to 63.51 after peaking above 300 during the initial breakout period.

Chaikin Money Flow remains positive at 0.31, pointing to continued accumulation. If Bitcoin can hold on to the US$78,000 - 79,000 area, it may try to break through US$80,000 again. Conversely, if it breaks below US$78,000, US$76,000 - 77,000 will become the next potential support area.

Mini Dictionary: Cai Jin's flow of funds (CMF) is a technical analysis indicator used to measure the weighted average of accumulated and distributed trading volume over a specific period of time, helping traders evaluate the buying and selling pressure of assets.

According to the latest liquidity heat map, leveraged positions are concentrated between US$78,000 and US$78,700, while there is a large cluster between US$76,000 and US$77,000. On the upside side, the main concentration area for liquidity is around $81,700 - 82,300, close to Friday's price peak.

A rebound above $80,000 could trigger short liquidation and push Bitcoin to $82,000. Failure to hold current support levels may increase the risk of a deeper correction, with $78,000 and $77,000 identified as possible downside targets.

If Bitcoin closes above US$80,000, attention may quickly shift to the US$81,400 - 82,000 area, with US$84,000 becoming the next possible upside target.