Bitcoin rallied 5% on Thursday, September 3rd, following comments from Federal Reserve Governor Christopher Waller at a Reuters event. Waller indicated he would support keeping interest rates unchanged at the September meeting, shifting market expectations around the Fed's policy direction.
The price movement coincided with significant capital inflows into spot Bitcoin ETFs, which received $730.8 million in net flows the same day. According to the CME FedWatch Tool, the rally reduced odds of a rate hike from 57% to approximately 50%, making the outcome of the September decision essentially uncertain.
Market Sensitivity to Fed Policy
Federal Reserve decisions have emerged as key price pivot points for Bitcoin. Rate decisions in January, March, and June 2026 triggered bearish reactions in Bitcoin, accompanied by elevated liquidation numbers.
The Fed's policy stance carries particular weight given recent history. In 2022, the Fed raised interest rates from 0.25% to 4.50% to combat inflation, a tightening cycle that coincided with significant capital outflows from crypto and a Bitcoin bear market.
Potential Scenarios Ahead
A decision to raise rates would signal that the Fed's inflation-fighting campaign continues, potentially increasing capital costs and forcing Bitcoin to reprice. Conversely, dovish signals supporting lower or stable rates could create conditions favorable for crypto. Sustained spot ETF inflows combined with accelerating Bitcoin demand could support a broader bull market shift.
With the outcome highly uncertain, any developments between now and the announcement may produce outsized market reactions as traders adjust positions based on shifting Fed expectations.
