Bitcoin Price Rally Relies on ETF Flows Amid Fed Rate Hike Expectations

Bitcoin's recent price surge has been influenced by decreasing expectations for a Federal Reserve interest rate hike, with the probability of an October increase dropping to 19% from 51% in the previous week. This shift follows a disappointing payroll growth figure of just 29,000 jobs in September, as reported by CME FedWatch. Lacie Zhang, research lead at Bitget Wallet, indicated that while the current market conditions are favorable, stronger inflows are necessary to confirm a sustained rally towards the $90,000 to $93,000 range.

Despite the supportive environment, Bitcoin's price has struggled to maintain levels above $87,000, suggesting that profit-taking and existing supply are absorbing institutional demand. In September, U.S. spot Bitcoin exchange-traded funds (ETFs) attracted approximately $2.6 billion, but the momentum has slowed in October, with net inflows fluctuating significantly. After reaching a peak of $999 million in daily net inflows on September 21, the market has seen alternating patterns of investment and profit-taking, leading to net redemptions of $90 million on October 5.

Zhang emphasized that a convincing breakout for Bitcoin would require sustained ETF inflows and a daily or weekly close above $87,400. The next targets for upward movement are set at $90,000 and $93,000, while key support levels are identified at $84,000 and $82,000. The analyst also noted potential risks, including stronger-than-expected inflation reports or renewed hawkish guidance from the Federal Reserve, which could revive rate-hike expectations and negatively impact Bitcoin's price. At the time of reporting, Bitcoin had fallen back below $86,000 after briefly reaching $86,698 earlier in the day.

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Source: KLEA News