Bitcoin hovered near $77,900 on Thursday as markets priced in the strongest odds of a Federal Reserve rate hike in over a year, with spot ETF outflows adding to the headwind for a market still digesting August’s 25% rally.
CME FedWatch now shows a 66% probability of a 25-basis-point hike at the September 16-17 meeting, up sharply from roughly 35% before Fed Chair Kevin Warsh’s August 28 Jackson Hole speech. Warsh called the inflation picture “concerning,” and Governor Michael Barr followed days later by backing a “decisive” increase if prices fail to cool. Polymarket odds briefly touched 72%, the highest level since the Fed paused rate cuts earlier this year.
The shift in expectations has rattled risk assets broadly, but Bitcoin faces a particular squeeze. The cryptocurrency rallied from about $62,500 at the start of August to a peak near $81,138, powered by a surge in spot ETF inflows and a Treasury bond buyback announcement that eased liquidity fears. Now that momentum is fading as the market confronts the possibility that the next Fed move could tighten financial conditions rather than loosen them.
Bitcoin opened Thursday at $77,311, down 0.1% from Wednesday’s opening price, before climbing to $77,893 by 7:19 a.m. ET. The 24-hour range spanned $76,264 to $78,184, with trading volume at roughly $17.5 billion. Fear and Greed Index readings sat at 70, classified as Greed, though the 30-day average had dropped to 47 from Neutral territory.
ETF Flows Reverse After Record August
U.S. spot Bitcoin ETFs recorded $236.5 million in net outflows on September 1, the largest single-day withdrawal since July 31. BlackRock’s iShares Bitcoin Trust (IBIT) accounted for $201.2 million of that total, with Fidelity’s Wise Origin Bitcoin Fund (FBTC) losing another $43.7 million. Bitwise’s Bitcoin ETF (BITB) was the sole gainer, attracting $8.4 million. Other Bitcoin products showed zero net flow.
The reversal came after a strong August, when spot ETFs collectively pulled in $3.52 billion, their best month of 2026 and a dramatic improvement from just $172 million in July. Nearly 80% of those inflows arrived in the two weeks following the Treasury Department’s August 19 bond buyback announcement, which had eased concerns about government borrowing crowding out private capital. Total fund assets rose 31% over the month, climbing from $76.3 billion to $99.6 billion.
September 1’s outflows reversed a nine-session inflow streak that had seen $142 million land on August 31 alone. The weekly pace of inflows dropped by more than half, falling from $1.9 billion to $946 million in the final week of August. One flow report attributed $205.9 million of the August 31 inflow to IBIT, while social-media analysis suggested roughly 95% of a reported $217 million daily inflow went to that single fund.
Glassnode analyst Frederik Theissen described the market as rangebound, noting sentiment has cooled from euphoria to neutral and flagging rising bond yields as the main headwind going forward. Bitcoin is capped below the $83,000-$86,000 zone, while support holds near $62,000-$65,000.
Oil and Inflation Drive the Hawkish Shift
The inflation impulse is largely energy-driven. Brent crude traded above $91 per barrel on Thursday after renewed U.S.-Iran strikes near the Strait of Hormuz, and PCE inflation, the Fed’s preferred target gauge, runs at 3.7% year-over-year, nearly double the central bank’s 2% goal. The latest oil price surge has compounded an already difficult picture for rate-sensitive assets.
Labor market data did not offer relief either. July JOLTS showed job openings nearly flat at 7.30 million, and June’s count was revised down by 177,000. Soft payroll signals might normally argue against tightening, but the current Fed appears focused squarely on inflation rather than employment. The Fed is split internally: a July discount-rate push by four of its 12 regional banks was rejected 9-3.
Wall Street’s rate calls have shifted accordingly. Barclays now forecasts hikes in both September and December. BNP Paribas projects three increases that would return rates to 4.25%-4.50% by mid-2027, erasing the cuts that markets had priced in for the first half of this year. The 10-year Treasury yield held above 4.8%, and the dollar remained firm, both weighing on crypto alongside equities.
Altcoins Buck the Trend
Despite Bitcoin’s sluggishness, altcoins posted modest gains on Thursday. BNB led the major tokens with a nearly 3% jump, while XRP and dogecoin each rose more than 2%. Solana and tron added around 2%, and hyperliquid was roughly flat. Bitcoin dominance slipped to 59.58%, down 0.05 points on the day, suggesting some rotation into smaller-cap assets.
Prediction markets offered a contrarian read. Kalshi traders are betting Bitcoin reaches $82,000 within September, wagering that August’s momentum survives the FOMC decision. The bet hinges on the view that the Fed will ultimately hold off on a hike despite the hawkish rhetoric, or that crypto has already priced in the worst case.
Technical analyst Ali Martinez flagged a familiar pattern: BTC may be tracing the same bottoming structure as 2023, with three failed attempts at the top of a descending channel, a roughly 20% pullback, then a decisive fourth breakout. A repeat would imply a dip toward $70,000 before any sustained move higher.
Derivatives data showed no whale-scale froth. Open interest is declining and funding rates sit neutral. Aggregate crypto market capitalization held near $2.63 trillion. The policy calendar is crowded ahead: August CPI lands September 10, the FOMC decides September 15-16, and SEC Chair Paul Atkins expects a CLARITY Act Senate vote the same week.
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