ETF demand remains strong, but inflation data could determine where Bitcoin goes next.
Bitcoin dipped below $80,000 as strong US jobs data raises the chances of another interest rate hike. Markets now put the odds of a Federal Reserve rate hike on September 16 at about 60%.
According to the recent Bitfinex Alpha report, the US added 162,000 jobs in August, while unemployment stayed at 4.1%. The data suggests the labor market remains strong, giving the Fed less reason to rush into cutting rates.
Strong Jobs Data Puts Bitcoin to the Test
The strong jobs report pushed two-year US Treasury yields above 4.34% as markets adjusted their expectations for the Fed. Higher rates can put pressure on Bitcoin because safer assets such as government bonds become more attractive.
Even so, Bitcoin held up for a while despite pressure. So far, it reached $82,400 on September 3 before pulling back and has since traded between roughly $77,200 and $82,100.
Meanwhile, the cryptocurrency remains about 42% above its July low. US spot Bitcoin ETFs have also continued to attract demand, recording nearly $1 billion in net inflows last week.
ETF Demand and Inflation Could Set the Next Move
Analysts at Bitfinex said this week’s inflation report will be an important test for Bitcoin. They are watching whether ETF demand can remain strong even while short-term interest rates stay high.
If ETF buying continues under those conditions, Bitfinex believes high rates may no longer be the main factor limiting Bitcoin’s recovery. A sustained flow of money into the ETFs could support Bitcoin if other market conditions remain favorable.
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Bitcoin also faces a potential selling hurdle as more than 71% of its supply is currently in profit. That figure is approaching the historical average of 74.7%, a level Bitcoin has previously moved above during shifts from weaker markets to stronger ones.
For now, Bitcoin remains between $77,200 and $82,100 as markets wait for fresh inflation data. A weekly close above $82,100 could strengthen the recovery, while hotter inflation could increase pressure on the Fed to raise rates.
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