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%.

Fewer coins bought there means fewer holders waiting to sell at breakeven.

Two Days Did the Lifting

Spot Bitcoin ETFs took in $2.31 billion across September 17, 18, 21, and 22. Bitcoin (BTC) rose 5.9% on September 18, when funds bought $433 million, and 6.7% on September 21, when they bought $999 million. Those two sessions produced almost all of the 13.2% gain to September 22.

The September 21 jump also caught short sellers, with $262 million of bets against Bitcoin liquidated in one hour. Closing a short means buying, which adds to the fund demand.

The Bitcoin Price Breakout and What It Targets

That demand pushed Bitcoin out of an inverse head and shoulders it had been building since February, a pattern where a deep middle low sits between two shallower ones. It broke the neckline on September 21, on the heaviest daily volume since August 21. The pullback since has been shallow, 0.5% on September 22 against the 3.3% drop on September 15.

The first hurdle is $86,935, which Bitcoin touched but has not closed above. A daily close there opens $89,825, then $93,940. The pattern’s measured move is about 43% from the neckline, pointing to $117,247, within 7% of the $126,080 all-time high record.

The floor is thicker. The band near $84,569 holds 2.92% of supply, the largest within 20% of the price, just above the $84,045 technical level.

A daily close below $84,045 would bring the neckline near $82,000 back into play.

Analyst’s View: Funds bought even with the two-year Treasury yield near its September high, which suggests the hike no longer scares them. If August inflation data on September 30 does not revive that fear, a daily close above $86,935 keeps the 43% path open.

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