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Ahmed Barakat
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Bitcoin price has clawed back to above $70,000 from $60,000 in late August, and traders are now assigning an approximately 85% probability to a Federal Reserve rate hike on Wednesday following hotter-than-expected inflation data. But that’s not all. Long-end Treasury yields nearing 5% are tightening competition for capital, forcing a direct test of whether bitcoin’s momentum can survive a less accommodating Fed.
The rebound is real, but it sits well below the highs of last year. Bitcoin remains 50% off its October 2025 peak above $126,000, meaning this recovery is a bounce off a two-year low rather than a resumption of the prior bull trend.
The immediate catalyst is a hot August inflation print that pushed market-implied odds of a Fed hike to around 85% heading into Wednesday’s decision, according to Reuters. Long-end Treasury yields pressing toward 5% compound the problem for non-yielding, risk-sensitive assets such as bitcoin by raising the opportunity cost of holding them.
That trader positioning is a different signal than what economists were forecasting just days earlier. A September 4-9 Reuters poll found 65 of 93 economists expected the federal funds rate to hold in the 3.50%-3.75% range at the September 15-16 meeting, with 52 of 93 predicting no hike for the rest of the year.
Matthew Dibb, chief operating officer of Stack Funds, said bitcoin had been in oversold territory for some time, adding that short-term traders are looking towards inflation figures and rate rises as short-term threats. Joseph Edwards, an independent financial researcher, was blunter about the immediate risk: “It would likely put a damper on the recent rally.”
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Structural Demand or Just a Positioning Rebound?
The case for calling this more than a dead-cat bounce rests on options positioning and ETF flows. The 25-delta skew, which measures demand for bullish calls against protective puts, turned positive for the first time in 12 months, implying traders are now paying a premium for upside exposure rather than downside protection.
Bitcoin ETFs backed that shift with nearly $2 billion in inflows the week of August 17, reversing eight straight weeks of outflows through May and June. Brian Vieten, senior analyst at Siebert Financial, framed the setup this way:
“We think bitcoin’s structural demand picture is improving, even as the near-term setup has become more vulnerable to macro and positioning-related volatility.”
None of that proves bitcoin has escaped its sensitivity to Treasury yields or Fed policy. A positive skew and renewed ETF demand show improved positioning heading into a binary event, and rising yields remain a textbook headwind for speculative assets by the primary source’s own framing.
Some bulls counter that Treasury buybacks aimed at capping yields could revive dollar-debasement concerns, which would favor scarce assets like bitcoin, but that remains a thesis rather than a confirmed flow.
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Where Bitcoin Options Traders Are Positioned The Price Into December?
The clearest read on where positioning is concentrated comes from December 25 expiry open interest data via Derive.xyz, which shows two dominant strikes well above current spot levels.
| Strike Price | Notional Open Interest | Expiry |
| $80,000 | ~$710 million | December 25 |
| $100,000 | ~$530 million | December 25 |
That concentration at $80,000 and $100,000, paired with the positive skew, indicates Bitcoin traders are structuring bets around a continued grind higher rather than a retest of the October price peak.
If the Fed hikes and signals it’s the start of a broader tightening cycle, higher yields and reduced liquidity would likely pressure bitcoin and interrupt the rebound, consistent with Edwards’ warning. If the Fed holds the rally could get room to extend, though that outcome is a scenario, not a base case; Fed Chair Kevin Warsh has so far resisted committing the central bank to any defined rate trajectory.
A separate wildcard sits in Congress. The Senate is scheduled for a Tuesday procedural vote on the Clarity Act, a bill that would define which tokens qualify as securities versus commodities and potentially boost institutional adoption. The market has likely priced in that the bill won’t pass, given delays and continued opposition.
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