Bitcoin's rebound past $70,000 faces a test this week as traders price an 85% chance the Federal Reserve raises rates on Wednesday. Options markets have turned bullish for the first time in a year, with bets clustering on $80,000 by December, while a Senate vote on crypto legislation could still hand the market a surprise tailwind.
Bitcoin opened at $76,806.19 on Monday, 0.6% below Sunday's open, then climbed to $77,873.33 by 7:31 a.m. ET. That follows a rebound past $70,000 in late August after months at two-year lows near $60,000, a sharp turnaround from a slump of roughly 50% off its October 2025 peak above $126,000.
Options traders turn bullish
The bitcoin options market flipped bullish for the first time in 12 months, according to data from Derive.xyz, with many traders betting bitcoin could hit $80,000 or higher by December. Sean Dawson, head of research at Derive.xyz, said the 25-delta skew turned positive on August 20, signaling a premium on upside call options.
Open interest for the December 25 expiry is clustered at the $80,000 strike, with about $710 million in notional value, and at $100,000, with roughly $530 million. Bitcoin ETF flows have also turned, with inflows reaching nearly $2 billion the week of August 17, after eight straight weeks of outflows in May and June.
A Fed decision hangs over the rally
Traders are assigning an 85% likelihood of a rate hike on Wednesday following hot inflation data, with long-end bond yields nearing 5%. Separately, the CME Group's FedWatch tool put the odds of a hike this week at 86.5% on Monday morning, up from 69.4% on Friday.
Joseph Edwards, an independent financial researcher, said a rate hike of any kind would likely not be seen as immediately positive for bitcoin. According to Investing.com: "It would likely put a damper on the recent rally." An indication from Fed Chair Kevin Warsh that a hike would be a one-off rather than the start of a cycle could still offer an upside surprise, said Jim Ferraioli, head of crypto research at Charles Schwab.
Senate crypto vote adds a wildcard
The market has likely priced in that the U.S. Clarity Act will not pass amid delays and continued opposition from senators, said Can-Luca Köymen, investment strategist at Sygnum. The Senate is set to take a procedural vote on the bill on Tuesday, which could determine its fate. If it unexpectedly passes, Ferraioli said, that would be a fundamental catalyst to the upside.
Sources: Investing.com, Yahoo Finance
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