The Zhitong Finance App learned that after several months of downturn, Bitcoin bulls have returned to the market. But this week's Federal Reserve interest rate decision will test this round of optimism, and the Senate vote on key crypto legislation may bring unexpected benefits.
Due to a brief decline in US bond yields, overall market sentiment improved. After hovering around a two-year low of around $60,000 for several months, the world's largest cryptocurrency rebounded and surpassed $70,000 in late August. This round of rebound marks a sharp reversal in Bitcoin's trend — it was previously down about 50% from its peak of over $126,000 in October 2025.
Although traders hardly think that Bitcoin will return to this peak, data from the options platform Derive.xyz shows that the Bitcoin options market turned bullish for the first time in 12 months, and many traders are betting that Bitcoin may hit $80,000 or more by December.
At first glance, this optimism seems out of place: the situation in the Middle East is still tense, the chances of the US Senate passing key crypto laws to boost adoption have declined, inflation is still high, and market expectations of the Federal Reserve's interest rate hike are heating up — and interest rate hikes usually take away the liquidity of risky assets.
Despite these headwinds, many investors still believe that Bitcoin, known for its high volatility, has reached its lowest point. Analysts said that after the inflation data is hot, traders expect the probability of interest rate hikes to reach 85% on Wednesday, the yield on long-term US bonds is close to 5%, and capital competition is intensifying. The question is whether Bitcoin can maintain its momentum.
“Bitcoin has previously been in the oversold region for some time.” Matthew Dibb, chief operating officer of Stack Funds, a Singaporean crypto investment management company, said, “Short-term traders are seeing inflation data and interest rate hikes as a short-term threat.”
Options traders are skewed and turn a lot
Sean Dawson, head of research at Derive.xyz, said that the 25-delta bias between demand for bullish options and demand for protective put options was corrected on August 20. This means there is a premium for buying an upward call option. “That's a bit too much.” he added.
Dawson attributed the improvement in sentiment to the fact that after the major SpaceX IPO took away market capital, capital generally returned to the crypto market, while the South Korean stock market, which also attracts speculative investors, has cooled down.
According to Derive.xyz, the outstanding contracts due on December 25 are concentrated at an exercise price of 80,000 US dollars, with a nominal value of about 710 million US dollars; the exercise price of 100,000 US dollars is about 530 million US dollars.
Bitcoin ETFs are also showing signs of a recovery in demand. In the week of August 17, capital inflows were close to 2 billion US dollars. Previously, there were eight consecutive weeks of outflows in May and June.
“People in the crypto community are now actually starting to see through all the bad news and ask, 'So what's the upside? '” Jim Ferraioli, head of cryptographic research at Carson Wealth Management, said.
Ferraioli said that if Federal Reserve Chairman Kevin Walsh suggests that the interest rate hike is a one-off, not the beginning of a cycle of rate hikes, it may be an upward accident. Analysts said that Walsh has so far refused to promise any established interest rate path.
However, independent financial researcher Joseph Edwards said that any kind of interest rate hike is unlikely to be immediately seen as a benefit to Bitcoin and other speculative assets. “This is likely to dampen recent gains.”
Although rising US bond yields are usually a headwind for risky assets, some Bitcoin bulls believe that the US Treasury's increase in repurchases — seen by investors as a move to lower yields — may raise concerns about the depreciation of the dollar, which in turn will boost demand for scarce assets such as Bitcoin.
“We believe that the outlook for Bitcoin's structural demand is improving, although the recent pattern is more susceptible to macro- and position-related fluctuations. Depreciation deals seem to be returning.” Brian Vieten, senior analyst at brokerage and wealth management firm Siebert Financial, said.
Trump administration's crypto policy takes center stage
Under US President Trump's crypto-friendly administration, the policy unexpectedly provided another potential Bitcoin boost.
Can-Luca Köymen, an investment strategist at Swiss digital asset bank Sygnum, said that due to delays and continued opposition from many senators, the market may have set that the US “Clarity Act” will not pass.
By defining which tokens are securities and which are commodities, the bill will resolve what the industry calls legal ambiguity, and may promote adoption. The US Senate will conduct a procedural vote on the bill on Tuesday, which may ultimately decide its fate.
“If the bill passes unexpectedly, I think it will be a fundamental upward catalyst.” Ferraioli said.