Bitcoin has surrendered its push above US$81,000, falling back towards US$78,000 as renewed fears of higher US interest rates took some of the heat out of a powerful late-August cryptocurrency rally.
The world’s largest cryptocurrency was trading around US$78,000–US$79,000 on Monday after reaching US$81,326.81 on August 28, its highest level in three months.
Bitcoin had rallied more than 20% from around US$62,000 in little more than a week, helped by renewed institutional buying and a broader move towards alternative assets.
However, the attempt to establish itself above US$80,000 ran into resistance after Federal Reserve chair Kevin Warsh used his Jackson Hole address to reinforce the central bank's determination to bring inflation back towards its 2% target.
Warsh puts rates back in focus
Warsh's comments rapidly changed expectations for US monetary policy.
Bitcoin dipped below US$78,000 following the speech as traders increased bets that the Federal Reserve could raise interest rates at its September meeting.
The US two-year Treasury yield jumped and the dollar strengthened as markets digested Warsh's message that the Fed still had “work to do” on inflation.
Higher rates generally present a headwind for cryptocurrencies and other risk assets because they increase the returns available from cash and government bonds.
The move was also felt across crypto-linked equities, with Coinbase, Strategy, Galaxy Digital (TSX-V:GLXY) and several Bitcoin miners falling sharply during Friday's session.
ETF money keeps flowing
There is nevertheless a significant counterweight to the macroeconomic pressure: institutional demand.
US spot Bitcoin exchange-traded funds recorded eight consecutive sessions of net inflows totalling around US$2.8 billion, their longest buying streak since April.
August inflows had already exceeded US$3 billion, making it the strongest month of 2026 at that point. Ether ETFs were also on an eight-session inflow streak, attracting more than US$1 billion.
Those flows helped propel Bitcoin through US$80,000 before Jackson Hole and suggest the rally has more support than a purely speculative short squeeze.
However, futures open interest declined during the run, indicating that part of the advance resulted from traders closing bearish positions rather than a wholesale rush into new leveraged long positions.
US$80,000 becomes the battleground
Bitcoin now faces a significant technical test.
Glassnode analysis identifies the US$81,000 to US$86,000 region as a major area of potential selling pressure, where several groups of longer-term holders are sitting near breakeven and may be tempted to sell.
A sustained move above roughly US$83,300, accompanied by continued ETF inflows, would provide stronger evidence that buyers are absorbing that supply.
Until then, US$80,000 looks set to remain the immediate battleground between growing institutional demand and a less favourable interest-rate environment.
Ether and Solana hold ground
The broader cryptocurrency market has remained comparatively resilient.
Ether was trading around US$2,500, while Solana was near US$106, XRP around US$1.41 and BNB close to US$700.
The total cryptocurrency market was valued at around US$2.62 trillion, with Bitcoin accounting for roughly 59.5% and Ether 11.2% of the market.
That high Bitcoin dominance indicates that despite strong gains across parts of the altcoin market, the current crypto cycle remains heavily dependent on Bitcoin.
What comes next?
Attention now turns to incoming US employment and inflation figures ahead of the Federal Reserve's September policy decision.
For Bitcoin, the equation has become relatively straightforward: continued ETF inflows provide underlying buying support, but a sustained move towards fresh highs may be difficult unless investors become more comfortable with the outlook for US interest rates.
After racing from around US$62,000 to more than US$81,000, the test is no longer whether Bitcoin can stage a rally.
It is whether it can hold one.