Can Bitcoin Still Rally After a 24% Surge in August? The Fed’s Shift Toward a More Hawkish Stance and the September FOMC Meeting Are Key Variables

In August, Bitcoin’s market staged a rally that thrilled investors. According to Gate market data, starting from the monthly low of $62,300.7, Bitcoin climbed to a peak of $81,473.2 within 30 days, for a maximum gain of about 30.8%. This performance set the best single-month record since the November 2024 U.S. election month, when Bitcoin jumped more than 40% in a single month and surged through the $90,000 level.

At the time, the market largely attributed August’s strength to two macro signals: expectations for a weaker U.S. dollar continued to build, and bets on the Federal Reserve pivoting toward easier policy kept intensifying. In August, the U.S. Treasury expanded the scale of bond buybacks. Some investors interpreted this as a backdoor way of managing the yield curve. Earlier than that, remarks from Federal Reserve officials had also fueled expectations of rate cuts. As "digital gold" and a liquidity-sensitive asset, Bitcoin drew strong spot buying support under these expectations.

However, just a few days later, the macro narrative quietly changed.

In late August, Federal Reserve Chair Kevin Walsch’s hawkish remarks at the Jackson Hole Global Central Bank Conference chilled the market. He made it clear that "the era of cheap money is over." Funds were flowing into new projects such as artificial intelligence. Faster economic growth would push rates higher—not lower. Then, at the G20 meetings of finance ministers and central bank governors, he further emphasized that inflation persistence was beyond expectations and that the 2% inflation target was a "hard constraint." After he finished speaking, the yield on the 30-year U.S. Treasury surged to around 5.26%, approaching the 19-year high. The yield on the 10-year U.S. Treasury rose in tandem to above 4.76%.

Bitcoin then quickly fell back from above $81,000 to around $78,000. Gold also weakened, and U.S. tech stocks came under pressure. The market seemed to be telling investors that Walsch’s hawkish signals were not a minor disturbance, but a reassessment of the entire logic behind August’s rally.

Is the macro foundation behind August’s rebound starting to crumble? To what extent will Walsch’s tightening stance affect the crypto market in September? Can ETF inflows offset the headwind of rising rates?

The macro backdrop of August’s rebound: the U.S. dollar weakening and rate-cut expectations converging

Bitcoin posted about a 24% gain in August, its best single-month performance since November 2024. This rebound was not driven by any structural breakthrough within the crypto market. Instead, it reflected macro trading logic.

There were two main driving forces behind August’s price action. First, expectations for a weaker U.S. dollar kept heating up. In August, investors bought hard assets such as Bitcoin, betting that the dollar would continue to depreciate. In August, the U.S. Treasury increased the scale of bond buybacks to at least $4 billion per transaction. The market interpreted this as a quasi way of managing the yield curve. Some analysts even compared it to the situation in the run-up to the 1992 pound crisis—when Stanley Druckenmiller and Scott Bessent teamed up to short the pound and beat the Bank of England. Although Bessent denied that buybacks were intended to suppress borrowing costs, the market clearly did not buy that explanation. Second, rate-cut expectations began to solidify in stages. Before Federal Reserve Chair Walsch delivered his Jackson Hole remarks, the market had leaned toward the view that economic slowdown would force the Fed to turn toward easier policy. That expectation pushed down U.S. Treasury yields and gave Bitcoin and other risk assets upward momentum.

But both of these logics are now unraveling in sync.

Walsch’s hawkish logic: why the cheap-money era is ending

Federal Reserve Chair Kevin Walsch’s remarks at the Jackson Hole Global Central Bank Conference sparked this round of the market shift. At the G20 meetings of finance ministers and central bank governors, he went further, stating clearly: "The era of cheap money is already over."

Walsch’s reasoning contains three core layers.

First, the demand for capital is undergoing structural changes. Walsch pointed out that a large amount of capital is flowing into building AI infrastructure. Even among the top five U.S. tech companies, they issued roughly $132 billion in debt in just the first seven months before 2026, while their average issuance over the past four years was only $35 billion. These bonds compete for the same funding pool as U.S. government securities, pushing up the cost of long-term capital.

Second, inflation persistence is higher than expected. The U.S. PCE inflation rate remains at 3.7%, core inflation at 3.3%, and 54% of the items in the consumption basket are still seeing price increases above 3%. The 6-month annualized inflation rate is even higher at 4.1%. Walsch explicitly said that the 2% inflation target is a "hard constraint," and until the Fed clearly sees inflation return to target, it "has work to do."

Third, the era of forward guidance is over. In his speech, Walsch also made clear that market participants should no longer rely on the Fed’s forward guidance to judge where policy will go next. This means that policy uncertainty itself has become a norm rather than a result of policy missteps.

Long-end yields jump to around 5.26%: BTC’s pricing anchor is being reset

After Walsch’s speech, the yield on the 30-year U.S. Treasury surged to around 5.26%, approaching the 19-year high. At the same time, the 10-year U.S. Treasury yield climbed to 4.76%-4.78%.

This signal threatens Bitcoin on three fronts.

Higher rates increase the opportunity cost of holding BTC. Bitcoin is a zero-coupon asset. When risk-free rates are above 5%, the opportunity cost of holding Bitcoin versus Treasuries increases significantly. Savers can earn certain returns by holding Treasuries without taking the price volatility risk of Bitcoin. One of Walsch’s core arguments is: "While savers wait, they can still earn returns, and Bitcoin won’t bring any returns."

Higher rates suppress risk-asset valuations. From asset-pricing models, a higher discount rate means the present value of risk-asset future cash flows falls. Although Bitcoin is not a cash-flow asset in the traditional sense, its "digital gold" narrative works best when market liquidity is abundant. When the cost of capital rises, the appeal of speculative assets naturally declines.

The inflation-hedge narrative is losing effectiveness. Bitcoin’s prior rise benefited partly from its "inflation hedge" narrative. But Walsch’s logic creates a closed loop: AI investment pushes up near-term inflation → the Fed is forced to keep rates high → high rates suppress speculative assets → Bitcoin faces pressure. Ironically, Walsch’s view is that "what solves inflation (AI) is precisely what boosts inflation in the short term."

Key levels and scenario analysis: September will demand a direction choice

As of September 1, 2026, the Bitcoin price was $78,019.3. Over the past 24 hours it moved -0.72%, over 7 days +0.31%, and over 30 days +23.92%. Market sentiment has shifted from neutral-to-optimistic to neutral-to-cautious.

Source: Gate market data

From a technical and on-chain data perspective, three key clues can be identified.

Spot buy support exists, but fund flows have reversed. ARP Digital partner pointed out that after Bitcoin gained 24% in August, it still held around $78,000, while open interest has fallen to the lowest level since May. This suggests that August’s move was driven by spot demand rather than leveraged longs. But on the other side of the coin: after U.S. spot Bitcoin ETFs saw nine straight trading days of net inflows totaling $924 million, they experienced a $202 million outflow on Friday last week, and the $82,000 resistance level was rejected repeatedly.

A layered structure of resistance and support. Glassnode analysis shows that above Bitcoin’s price, there is a cost-basis resistance for holders around $80,800. Around $82,300 is the market maker Gamma flip zone. The $83,000-$86,000 range forms the core supply zone, which includes multiple layers of pressure: short-liquidation, supply from long-term holders, and sell orders in the order book. On the downside, the cost basis for short-term holders is roughly $70,000. More importantly, the key support zone lies at $62,000-$65,000. The 70% probability range implied by the options market (as of September 25 expiry) centers on $69,000-$89,700, indicating that the market has not yet priced in a clearly defined breakout direction.

A dense lineup of September catalysts. August CPI data will be released on September 11. The FOMC meeting is on September 16. CME FedWatch shows that the probability of a 25 basis point rate hike has jumped from about 36% before Walsch’s remarks to 57%-66.4%. The August jobs data on September 6 will be the last key labor report before the FOMC. If the data is strong, it could further push up rate-hike expectations and cause Bitcoin to retest the prior low of $77,200.

Source: cmegroup

Can ETF inflows offset the macro headwinds?

The key difference this cycle has versus past cycles is that U.S. spot Bitcoin ETFs have become an important structural source of buying pressure. Last week, net ETF inflows were close to $1 billion, which is historically quite strong.

But the effectiveness of this hedge tool is now being tested.

First, ETF flows are not one-way. Friday’s $202 million outflow shows that macro panic sentiment can also influence ETF investors’ decisions. Second, ETF inflows may not fully offset the systemic hit to risk appetite from the repricing of rate-hike expectations. When the market’s odds of Fed rate hikes exceed 60%, institutional investors often prefer to reduce overall risk exposure rather than execute precise switch trades between different asset classes. Third, there is no clear bullish skew in the options market. Glassnode data indicates that options expiring on September 25 do not show clear pricing for a directional breakout.

In its latest analysis, Bitfinex noted: "ETF and stablecoin liquidity continue to support prices, but rate-hike expectations limit upside. If crypto inflows stay resilient, it will prove that underlying demand remains solid." The implication is clear: if ETF inflows can’t maintain resilience under the current macro environment, Bitcoin will face significant downside pressure.

Conclusion

The macro foundation for Bitcoin’s roughly 24% rise in August was built on a weaker dollar and easing expectations. But Walsch’s two speeches at Jackson Hole and the G20 meetings have already systematically dismantled both narratives. Faster economic growth implies higher funding demand. The AI investment boom lifts long-term yields. And inflation persistence requires the Fed to keep a tightening stance.

Current market structure suggests Bitcoin is stuck in a tug-of-war near $78,000, with resistance overhead and support below. In September, Bitcoin will face a dual test from CPI data and the FOMC decision. If the probability of rate hikes rises further above 70%, Bitcoin could face a more significant pressure test.

For market participants, the key variables to track right now are not Bitcoin’s on-chain data or technical indicators, but two traditional financial signals: the trend in 10-year U.S. Treasury yields and how the rate-hike expectations are priced ahead of the September FOMC meeting. If long-end yields keep rising and the rate-hike probability stays elevated, the rebound logic that fueled Bitcoin in August may indeed have already failed.

FAQ

Q: What is the current probability of a September Fed rate hike?

As of September 1, CME FedWatch shows that the market-implied probability of a September rate hike is about 57%-66.4%, up sharply from roughly 36% before Walsch’s Jackson Hole speech. The final decision will depend on August CPI data released on September 11.

Q: Where are Bitcoin’s key support and resistance levels right now?

Near-term key support sits in the $77,200-$78,000 range. If that breaks, it could drop toward $70,000 (cost basis for short-term holders). Resistance is concentrated in $80,800-$82,300, and the $83,000-$86,000 zone is the core supply range.

Q: Why do rising U.S. long-term government bond yields hurt Bitcoin?

A 30-year U.S. Treasury yield rising to 5.26% means risk-free rates are at a 19-year high. That raises the opportunity cost of holding Bitcoin (a zero-coupon asset). At the same time, it suppresses overall risk-asset valuations and weakens Bitcoin’s "inflation hedge" narrative.

Q: Can ETF inflows offset the negative impact of Fed tightening?

In the last week of August, net ETF inflows were close to $1 billion, but last Friday already saw outflows of $202 million. Even when macro panic hits, ETF money can leave. At this stage, it is not sufficient to fully offset the systematic downside pressure to risk appetite from higher rate-hike expectations.

Q: What other key events in September could affect Bitcoin’s trajectory?

September 6 will release August nonfarm payroll employment data. September 11 will publish the August CPI report. September 16 is the FOMC meeting where the rate decision will be announced. On the geopolitical front, the evolution of the military conflict between Iran and the U.S. is also worth watching, and higher oil prices could further push up inflation expectations.