Although it was stopped at $82,400 earlier this week, BTC at $80,000 is actually a lot better than it should be, at least in theory.
Bitcoin tried and failed on several occasions to decisively break above the crucial $80,000 level, but perhaps the more important question is why it hasn’t dumped much further.
After all, the macro landscape is anything but bullish given the renewed attacks between the US and Iran, the hawkish Fed, and the surprisingly strong jobs data.
BTC Should Be Hurting
The latest geopolitical developments arrived this weekend as the two warring parties exchanged fresh attacks after Iran’s Revolutionary Guard launched ballistic missiles against two US Navy vessels. The US subsequently struck three Iranian crude oil carriers, while the Middle Eastern country also targeted tankers and US-linked vessels in waters around the Strait of Hormuz.
The escalation matters far beyond geopolitics as Brent crude climbed toward $100 per barrel again amid renewed concerns about energy supplies. Higher oil prices can directly feed into inflation, making the Federal Reserve’s decision next week even harder.
The US central bank has become another issue for BTC. Chair Kevin Warsh adopted a distinctly more hawkish tone at Jackson Hole last week, emphasizing that inflation remains too high and that the Fed could still have “work to do.”
The odds for a September rate hike jumped after the speech and went even higher after Friday’s jobs report. It showed that the US economy added 162,000 jobs in August, almost triple expectations of 56,000, while unemployment remained unchanged at 4.1%.
Although that’s good news for the economy, risk assets do not benefit as the hope for easier monetary policy fades given the higher inflation.
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September rate hike odds jumped to 65% at their peak. The two-year Treasury yield reached its highest level since January 2025, the greenback strengthened, and stocks came under pressure.
Bitcoin dropped by $3,000 initially, but rebounded swiftly.
Absorbing Bad News
All of the above creates an atmosphere highly unfavorable for risk-on assets like BTC. Yet it remains at $80,000 even during the weekend when the attacks in the Middle East resumed, and it’s up roughly 25% over the past month.
Part of the explanation for why the cryptocurrency has performed so well comes from the ETF performance. The funds continue to attract significant amounts, with Thursday being a prime example. Over $730 million entered the ETFs, the highest single-day level since January.
What’s even more impressive is that gold has lost a significant portion of its gains charted after the mid-August rally, while BTC holds strong. However, this doesn’t guarantee that BTC cannot fall. In fact, there are two major threats in the next 10 days or so.
First, it’s the CPI, which arrives on September 11. A hotter-than-expected inflation reading, especially after the rise in oil prices, could push expectations for a rate hike even further.
Then it’s the conclusion of the FOMC meeting on September 16. An increase in the rates combined with hawkish guidance from Warsh could finally push BTC through key support levels, as discussed yesterday.