Crypto stages major rally as Fed rate hopes send Bitcoin to four-month high

Bitcoin climbed 6.8% to a four-month high near $82,200 on September 3-4, after Federal Reserve Governor Christopher Waller signaled he favors holding rates steady at the upcoming September 15-16 FOMC meeting. The rest of the crypto market followed, with total capitalization jumping roughly 3.7% to approximately $2.81 trillion.

The rally wasn’t limited to crypto. The S&P 500 gained 1.06% and the Nasdaq rose 1.4%, as traders across asset classes recalculated the odds that the Fed would tighten further. Before Waller’s remarks, futures markets had priced a September rate hike at roughly 63-70% probability. Afterward, that number dropped to around 50%.

The numbers behind the move

Ethereum posted gains of 4-5%, while XRP climbed about 6%. The standout performer was Zcash, which surged between 16-18%.

US spot Bitcoin ETFs recorded net inflows of $731 million on the day, with BlackRock’s IBIT alone absorbing $454 million.

A wave of short liquidations amplified the price action. When Bitcoin broke through key resistance levels, leveraged bearish positions got force-closed, creating a cascade of buy pressure that pushed prices higher still.

What Waller actually said, and why it matters

Waller’s comments centered on a conditional stance: if inflation data continues to ease, he sees no reason to raise rates at the September meeting.

On-chain signals and the bull case

On-chain analytics firm CryptoQuant flagged a Bull Score of 70, a composite metric that aggregates various blockchain-level indicators to gauge market sentiment.

Some analysts urged caution about the quality of the buying behind this rally. A significant portion of the upward move was driven by short liquidations rather than fresh capital entering long positions.

The next major test arrives on September 11, when the August CPI report lands. If inflation continues its downward trajectory, it would validate Waller’s dovish stance. A hot print could reignite rate-hike fears and unwind much of what happened this week.

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