Bitcoin bounced back from Tuesday’s low of $110,714 and topped $114,000 Thursday morning, reaching its highest level since August 24, per CoinGecko data.
Its price movement comes as U.S. spot Bitcoin ETFs notched inflows of $757.1 million Wednesday, per SoSoValue, an eight-week high. In total, U.S. ETFs have accumulated $1.39 billion worth of Bitcoin in September.
“These inflows were largely driven by the excellent news from the PPI numbers, which came in much better than expected,” DarkFrost, a pseudonymous verified analyst at CryptoQuant, told Decrypt.
Bitcoin’s recent push beyond $113,000 is an “encouraging sign,” according to DarkFrost, who noted that its uptrend was accompanied by a 6.60% rise in open interest to $43.3 billion and positive funding rates.
While Bitcoin ETFs have been flooded with a multi-week record in inflows, Ethereum funds are on the sidelines with a negative netflow of $668.72 million for September, SoSoValue data shows.
This is a “capital rotation pattern,” Illia Otychenko, lead analyst at CEX.IO, told Decrypt in a previous report, suggesting that funds are “shifting back into Bitcoin from Ether,” in anticipation of the September 17 Fed rate cut decision.
Fed rate decision looms
Worsening jobs data releases over July and August have put the Fed under pressure to cut interest rates. Core inflation, however, has hovered above 3%, which conflicts with the central bank’s dual mandate.
Investors, as a result, are expecting the Fed to stimulate the economy with a larger-than-anticipated rate cut.
With a quarter-point rate cut all but factored in, investors could be speculating on a half-point rate cut, which could be driving Bitcoin’s ETF inflows, said Stephen Gregory, founder of crypto trading platform Vtrader, in another Decrypt report.
CME’s FedWatch tool shows 92% odds of a 25 basis point rate cut and an 8% chance of a 50 basis point rate cut. Users of Myriad, a prediction market launched by Decrypt’s parent company DASTAN, put an 80% chance on the Fed cutting interest rates by 25bps.