Bitcoin rebounds as institutional inflows return and Fed rate cut expectations grow

Bitcoin (BTC) has staged an impressive recovery from the lows around $107,000 and is now trading steadily near $115,000.

This upward move reflects the improvement in investors’ risk appetite ahead of the upcoming FOMC meeting.

Recent developments show that capital is flowing back into risk assets, with Bitcoin continuing to assert its role due to its sensitivity to monetary policy expectations.

One of the key factors supporting Bitcoin during this period is institutional capital inflows.

Net inflows into U.S. spot Bitcoin ETFs have picked up again after a sluggish phase, helping to thicken market liquidity.

Just last week, net inflows into spot Bitcoin ETFs reached nearly $2.3 billion, marking the strongest week since mid-July.

At the same time, on-chain data indicates significant accumulation from large wallets in the $113,000 – $114,000 range, while net outflows from exchanges have continued. In the derivatives market, open interest has increased alongside funding rates returning to a neutral-to-slightly-positive range, reflecting active long positioning but not yet overly risky. This combination of signals shows that Bitcoin’s underlying demand is becoming more firmly established.

On the macro front, the picture is more complex. U.S. economic data from last week sent mixed signals: August CPI rose 0.4% m/m, above the forecast of 0.3% and double the previous reading of 0.2%, showing that inflationary pressures persist. In contrast, PPI unexpectedly fell by 0.1%, reflecting easing input costs. Core retail sales remained stable while headline figures were weaker, and notably, the Michigan Consumer Sentiment index dropped sharply to 55.4—well below expectations. This mix has led the market to almost unanimously expect the Fed to cut rates by 25 basis points at the September 18 meeting, but the more important factor is how the Fed guides its outlook: whether it signals the start of a clear easing cycle, or maintains a cautious tone given ongoing inflation risks.

Against this backdrop, Bitcoin enjoys a dual advantage. On the one hand, expectations of Fed rate cuts reduce the opportunity cost of holding non-yielding assets, thereby increasing BTC’s attractiveness. On the other hand, geopolitical uncertainties—from Russia–NATO tensions with repeated drone incursions, to developments in the Middle East following Israeli airstrikes in Qatar—continue to reinforce Bitcoin’s role as a “decentralized safe-haven” asset, alongside gold. The combination of liquidity and safe-haven dynamics makes BTC a notable destination for global capital in this sensitive period.

Nevertheless, risks remain. If the Fed surprises with a more hawkish tone than expected, real yields could rise, the U.S. dollar could strengthen, and Bitcoin could come under adjustment pressure. Furthermore, the derivatives market, with its increasingly high open interest, always carries the risk of sudden long squeezes if sentiment shifts abruptly. Legal and regulatory factors also cannot be overlooked, as tighter measures on stablecoins or ETFs could directly affect capital flows.

In the short term, Bitcoin faces a critical juncture: either entering a sustainable uptrend supported by monetary easing and continued institutional inflows, or undergoing a correction if the market receives a hawkish signal from the Fed. Therefore, investors need to closely monitor upcoming economic news and macro developments this week in order to craft appropriate trading strategies.