The bill stalled, the Fed raised rates, and Bitcoin BTC is back above $80,000—what is driving this rally?

The bill stalled, interest rates were hiked, yet Bitcoin did not continue to fall as the market expected. Over the past week, BTC rose about 4.9%, reclaiming the $80,000 level, and mainstream crypto assets also rebounded.

After the Fed's interest rate decision was announced, Bitcoin briefly fell back to around $75,400. By September 19, according to market data from BiyaPay, a global one-stop asset allocation platform, Bitcoin had risen back to around $81,000, and Ethereum was also approaching $2,620. Over the past week, Bitcoin and Ethereum rose about 4.9% and 4.6% respectively.

On the surface, this is a contrarian rally after bearish news landed. What is truly worth asking is whether this rebound was supported by spot capital, or mainly came from short covering and position repair.

Bearish News Landed, but BTC Did Not Continue to Sink

The setback to the crypto bill first affected market expectations for further clarity in the U.S. regulatory framework.

Previously, the market widely expected the relevant bill to draw clearer boundaries for digital asset issuance, trading platforms, and custody businesses. After the procedural vote failed to pass, the difficulty of advancing the bill in the short term clearly increased, and the uncertainty faced by some trading platforms and projects was once again put on the table.

But this news did not appear without any prior expectation. Before the vote, the market had already lowered the probability of the bill being enacted within the year for several consecutive days, and prices had already reflected part of the pessimistic sentiment in advance. After the voting result was announced, Bitcoin did indeed fall, but did not experience a sustained loss of momentum.

This reveals a detail: what the market trades is not the news itself, but the gap between the news and prior pricing. When expectations are already pessimistic enough, even an unsatisfactory actual result may not necessarily create new selling pressure.

The Fed's rate hike follows similar logic. On September 16, the Fed unanimously approved a 25 basis point rate hike by a 12-0 vote. The official statement said that U.S. economic activity was still expanding steadily, household spending remained resilient, productivity growth and capital investment remained strong, but inflation was still elevated.

Although this rate hike was relatively tight, it did not exceed the market's previous main expectations. What really mattered was that after the rate decision landed, the 10-year U.S. Treasury yield and oil prices did not continue to rapidly break through in a more unfavorable direction, and the market's macroeconomic pressure did not worsen further for the time being.

Those Who Bought First May Not Have Been Bulls

In this rebound, short covering very likely played an important role.

Previously, Bitcoin fluctuated repeatedly around $75,000, and the market had formed relatively concentrated bearish positions regarding factors such as high interest rates, oil prices, and the setback to the bill. When prices did not continue to fall after the bearish news landed, some shorts chose to close their positions. Closing positions itself generates buying, and rising prices trigger more stop losses, ultimately forming a relatively rapid passive upward move.

This type of market often looks very strong, but it is not exactly the same as spot capital actively entering. The former relies on position adjustment, while the latter requires new funds to continue buying. Both forces can push prices higher in the short term, but their ability to support subsequent market action differs.

Recent market analysis also mentioned that improved risk appetite, falling oil prices, and short liquidations jointly drove Bitcoin's rebound, but it remains necessary to observe whether the breakout can hold.

Therefore, Bitcoin reclaiming $80,000 is an important price signal, but it cannot by itself prove that the market has completed a trend reversal.

ETF Flows Are Recovering, but This Is Not Yet a Full Return

Changes in spot Bitcoin ETF flows can help determine whether this rally has support from spot demand.

According to statistics, for the week ending September 18, U.S. spot Bitcoin ETFs recorded total net inflows of about $6.2 million. This figure is not large, but compared with net outflows of about $462.7 million the previous week, it at least shows that funding pressure has eased.

Among them, single-day net inflows on September 18 were about $433 million, the largest single-day inflow since September 3. Fidelity's FBTC saw inflows of about $310.7 million, while BlackRock's IBIT saw inflows of about $108.4 million.

But if the weekly data is broken down, the conclusion is less optimistic. On Tuesday and Wednesday, the relevant ETFs saw outflows of about $450.3 million and $296 million respectively, and the inflow on the final trading day was mainly used to repair the previous gap. Apart from IBIT and FBTC, other Bitcoin ETFs still had combined outflows of about $194.4 million. Year to date, Bitcoin ETF net flows are still around negative $1.45 billion.

This means institutional capital is observing rather than having already formed a sustained and consistent buying direction. A single-day inflow can improve sentiment, but only multiple consecutive trading days of net inflows across multiple funds can more strongly indicate that the capital structure is changing.

When sorting through this kind of market action, I do not only stare at Bitcoin's single-day gains and losses, but also simultaneously observe price reactions in the dollar, U.S. stocks, Hong Kong stocks, and other digital assets. As a global one-stop asset allocation platform, BiyaPay covers scenarios including digital assets, U.S. stocks, Hong Kong stocks, and fiat currency exchange. After depositing digital currency into the account, users can first instantly convert it into USD or HKD, and then transfer it to U.S. or Hong Kong stock trading accounts. This way, different assets are placed together more easily to judge what capital is trading.

If Bitcoin rises while the dollar weakens, risk appetite in U.S. stocks recovers, and ETF inflows continue, it suggests the market may be trading on improved liquidity. If Bitcoin rises but ETFs still see outflows, Ethereum does not follow, and the dollar and U.S. Treasury yields continue to strengthen, then this rally is more likely to come from short covering and short-term position repair.

On the surface, the market is a price, but behind it, several types of capital are often simultaneously repositioning.

Ethereum Has Not Fully Kept Pace, Showing the Market Is Still Screening

Ethereum recently approached $2,620, with a gain of about 4.6% over the past week, but ETF flows performed weaker than Bitcoin.

For the week ending September 18, U.S. spot Ethereum ETFs saw net outflows of about $140 million, ending four consecutive weeks of net inflows. Even though inflows on September 18 were about $143.8 million, they did not fully offset outflows from the previous trading days.

The divergence between Bitcoin and Ethereum shows that the market is not buying digital assets across the board, but rather favoring assets with relatively stronger liquidity and market consensus.

If only Bitcoin remains strong going forward and Ethereum and other mainstream assets cannot improve in sync, it would indicate that market risk appetite is still limited. Conversely, if Ethereum ETFs resume stable net inflows, the market's trading breadth expands, and the linkage among digital assets strengthens, then the breadth of the rebound will truly improve.

Above $80,000, What Really Needs to Be Verified

What needs attention next is not just how much more Bitcoin can rise, but whether this rally can break free from being driven by liquidations and short covering.

First, watch whether Bitcoin can remain stable above $80,000. If the price repeatedly holds and spot trading volume increases, it would indicate that the quality of buying has improved. If the price rises rapidly and then volume shrinks, caution is needed regarding short-term capital taking profits.

Second, watch whether ETF flows can continue to return. A single-day inflow of $433 million shows that the market is not without buyers, but it is not enough to prove that institutional capital has fully turned.

Finally, watch whether the macroeconomic environment continues to ease. The Fed's latest projections show a median personal consumption expenditures price index forecast of 3.7% for 2026 and a median federal funds rate of 4.1% at year-end. Inflation and interest rates will remain important variables in the pricing of risk assets.

As long as the dollar and U.S. Treasury yields strengthen again, Bitcoin may once again face liquidity pressure. Conversely, if oil prices fall, market concerns about interest rates weaken, and ETF flows continue to improve, the price foundation above $80,000 will become more solid.

Conclusion

The crypto bill stalled, the Fed raised rates, yet Bitcoin reclaimed $80,000. This is not because the market suddenly ignored all bearish factors, but because some of this news had already been traded before it landed.

The current rebound is being driven by several forces together: repaired risk sentiment, falling oil prices, short covering, and ETF flows returning before the weekend. It shows that selling pressure has not continued to expand, but it has not yet fully proven that new long-term buying has formed.

Therefore, $80,000 is more like an important observation level rather than a conclusion that the market has already reversed. What is truly worth watching going forward is whether spot capital can continue to enter, whether ETF inflows can spread from a small number of funds, and whether Bitcoin can maintain price resilience in a high interest rate environment.

Price has given the first answer, while capital flows and the macroeconomic environment still need further confirmation.