Bitcoin rebounds as markets absorb two major shocks

Welcome to your BTC Markets VIP Desk briefing.

Time to read: ~5 minutes

The week in 60 seconds

• The Fed delivered its first-rate hike in three years on Wednesday, and Bitcoin shrugged it off, reclaiming US$80,000 (A$112,000) within 48 hours.
• The Senate's CLARITY Act, the closest thing to a crypto market-structure bill, failed on a 49–50 cloture vote, 11 votes short of the 60 needed, though the CFTC has since sent its own rules to the White House.
• US spot Bitcoin ETFs closed the week positive with a US$433 million (A$606.2 million) Friday inflow, and Ether ETFs snapped a four-week outflow streak.
• Solana and XRP outran Bitcoin on the Scorecard this week as risk appetite broadened beyond the majors.
• Core PCE, the Fed's preferred inflation gauge, lands Friday and will help determine if this week's hike was a one-off or the start of a run.

Intro

Most weeks with a rate hike and a failed Senate bill would have sent risk assets lower. This week did the opposite: the Fed raised rates for the first time since 2023, the CLARITY Act died in the Senate, and Bitcoin still climbed back above US$80,000 (A$112,000) by Friday. That resilience is the story below, not proof of decoupling, but a sign that ETF demand is absorbing shocks. We also look at where the Scorecard landed and what's on the calendar ahead of Friday's inflation print.

Significant events 

A rate hike and a failed bill both landed this week, and the market absorbed both without much damage.

The Fed hiked for the first time since 2023

The U.S. Federal Reserve raised its benchmark rate by 25 basis points on Wednesday and signalled at least one more hike is possible this year. Bitcoin dipped alongside equities into the decision but recovered from the low US$76,000s (A$106,400s) to above US$80,000 (A$112,000) by Friday. The speed of that recovery is the more useful signal than the hike itself: spot and ETF demand look deep enough now to absorb a hawkish surprise without the multi-week drawdown similar shocks produced in prior cycles.

CLARITY Act fails in the Senate, CFTC moves anyway

The Senate blocked the CLARITY Act, the year's main crypto market-structure bill, on 15 September. The 49-50 result was procedural on whether to open debate at all, and it needed 60. Days later, the CFTC sent its own proposed crypto rules to the White House, with regulators moving ahead without waiting on Congress. The market barely reacted: Bitcoin fell only briefly on the Senate news before Solana and Hyperliquid led gains through the same window, consistent with the resilience seen around the Fed decision.

ETF flows turned constructive after a rocky stretch

US spot Bitcoin ETFs booked a US$433 million (A$606.2 million) net inflow on Friday to close the week positive, and Ether ETFs snapped a four-week outflow streak, per The Block. The timing matters more than the size: allocators added exposure in the same week as the rate hike and the CLARITY Act failure, into the headline risk rather than around it.

By the Numbers

The Week in Data

25bp: Size of the Fed's rate rise on 16 September, its first hike since 2023.

Source: Federal Reserve

US$433m (A$606.2m): Friday net inflow into US spot Bitcoin ETFs, enough to close the week marginally positive.

Source: The Block

70: Fear & Greed reading of “Greed.”

Source: Alternative.me

US$2.76tn (A$3.87tn): Total crypto market capitalisation.

Source: CoinGecko

Market snapshot

Sentiment reads bullish, but two major sentiment gauges disagree this week, worth flagging rather than smoothing over.

The Fear & Greed Index sits at 70 (“Greed”), little changed on the week. That is a meaningfully more bullish read than CoinGecko’s own sentiment gauge, which shows 49 (“Neutral”) at the same time. The difference reflects two independently constructed measures of crypto market sentiment and is worth noting this week.

Bitcoin closed the week around US$81,178 (A$113,894), while Ether is around US$2,645 (A$3,711) and XRP is holding near US$1.41 (A$1.98). Total crypto market capitalisation sits around US$2.76 trillion (A$3.87 trillion), with Bitcoin dominance around 57.3%.

The Signal

ETF flows flipped positive in the same week as a rate hike and a failed Senate bill, and that sequencing is the story.

US Spot Bitcoin & Ether ETF Net Flows, Week of 15 to 19 September

Daily flow data for US spot Bitcoin and Ether ETFs shows a pivot from outflows earlier in the week to a US$433 million (A$606.2 million) Friday inflow for Bitcoin funds. Ether ETFs also recorded a Friday inflow, but still ended the week in net outflows, snapping a four-week inflow streak. The turnaround came after the Fed hike and CLARITY Act failure, not before.

Source: SoSoValue/The Block

Economic calendar

TL;DR: US activity and consumer data take centre stage this week, with flash PMIs, jobless claims and durable goods offering the next read on the economy after the Fed’s September rate hike.

22 September: Chicago Fed activity data

The Chicago Fed’s latest activity reading offers an early look at US economic momentum following the Fed’s September rate decision.

23 September: Flash US Manufacturing & Services PMIs

The preliminary September PMIs provide an early read on business activity across the manufacturing and services sectors, giving markets another indication of how the US economy is tracking after the Fed’s hike.

24 September: US jobless claims and new home sales

Weekly initial jobless claims provide the latest check on labour-market conditions, while August new home sales offer a read on housing demand.

25 September: US durable goods and consumer sentiment

August durable goods orders provide a read on business and consumer demand for longer-lasting products. Final September consumer sentiment data will also offer an updated view of household confidence and inflation expectations.

From the Desk

The market absorbed two genuine shocks this week without cracking, and that resilience, not the shocks themselves, is what we're watching in the days ahead.

What stands out isn't the Fed hike or the Senate vote individually, since both were plausible outcomes. It's that Bitcoin recovered from both within days rather than weeks, a different texture to comparable shocks earlier in the cycle. The Fed raised rates by 25 basis points, while the CLARITY Act fell short of the 60 votes needed to advance in the Senate. Federal Reserve ETF flows turning positive in the same window also suggest demand remained resilient through the volatility. With the next PCE inflation print due on 30 September, the immediate focus turns to this week's activity, labour and consumer data for the next read on the US economy.

Question of the Week

Q: If the Fed hikes again in October, does that automatically mean bad news for crypto?

A: Not automatically, based on this week. Bitcoin fell only briefly after Wednesday's hike before recovering above US$80,000 (A$112,000), suggesting price action is being driven by more than the rate decision alone. ETF demand and positioning also matter, with US spot Bitcoin ETFs returning to positive flows by the end of the week. The Block A second hike would tighten conditions further and is worth watching, but a hike and a falling crypto price aren't the same thing. The more useful signal is how ETF flows and yields move in the days after.

Story of the week

A computer designed to fly astronauts to the Moon once ran Bitcoin's mining algorithm, and the maths on how far behind it now is says more about proof-of-work than any chart could.

In 2019, engineer Ken Shirriff programmed a restored Apollo Guidance Computer, the roughly 70-pound navigation computer developed for the Apollo missions, to run Bitcoin's mining algorithm. It took 10.3 seconds per hash, meaning it would need roughly a million times the age of the universe to find one block. The clip resurfaced this week, and the numbers have only gotten stranger: Bitcoin's hashrate has grown to around 934 exahashes per second, about 14 times its 2019 level, stretching the Apollo computer's odds to roughly 13 million times the age of the universe per block. It is a striking comparison between one of the defining computers of the space age and the scale of the network now securing Bitcoin.

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