Bitcoin struggles to hold $80,000 as US demand weakens

Bitcoin is struggling to maintain the $80,000 mark, pressured by weak US demand and ongoing volatility in investor flows, while expectations of higher interest rates are adding further strain to the cryptocurrency.

Trading activity in US-listed spot Bitcoin exchange-traded funds (ETFs) reveals fluctuating demand; despite increased inflows in August, the funds saw two days of significant outflows last week.

US market indicators continue to reflect subdued appetite for Bitcoin, with the seven-day average Coinbase premium remaining negative for over four months. This metric measures the price gap between Bitcoin on the largest US crypto exchange and international platforms, and the recent rally has not pushed it into positive territory.

Data from Glassnode shows that average daily inflows into Bitcoin ETFs reached $290 million during the recent rally, but trading activity remained below levels seen in previous bull runs.

The firm notes that inflows driven by isolated policy-related news, without broader market momentum, often coincide with short-term price shifts, weakening the case for a sustained rally at the same pace.

In the derivatives market, Tony Sycamore, an analyst at IG Australia, said much of Bitcoin's August rally was due to short covering, bringing net positions close to zero.

This comes as the broader macroeconomic environment has become less supportive for Bitcoin, after a hawkish speech by US Federal Reserve Chair Kevin Warsh at last week's Jackson Hole symposium revived expectations of imminent interest rate hikes to contain inflation. The Federal Open Market Committee is scheduled to meet on September 15 and 16.

Bitcoin also faces a price range that could limit further gains, with Glassnode estimating that long-term holders are targeting the $83,000 to $86,000 range to sell their holdings.

Conversely, Sycamore still expects support for downward moves, saying: "Technically, we continue to expect that dips back into the mid-to-lower $70,000 to $80,000 range will find strong buying support around the 200-day moving average at $69,507."

Bitcoin was trading at around $77,700 as of 10:45 a.m. London time on Thursday.