Bitcoin Returns Above $81,000 as Fed Rate Hike Odds Drop

Bitcoin breaks $81,000 as trade sentiment shifts

Bitcoin rose back above $81,000 on Friday after traders lowered their expectations for a U.S. Federal Reserve interest rate increase this month. The move boosted demand for riskier assets, including cryptocurrencies. Bitcoin gained about 4% in 24 hours.

Zcash was the top performer among major tokens, jumping nearly 15% in a day and 20% over the week. It reached the landmark $1,000 level. Ether, BNB, XRP, and HYPE also saw gains.

Key market numbers

• Bitcoin: up about 4%, trading above $81,000.
• Zcash: up nearly 15% daily and 20% weekly.
• Fed rate hike odds: dropped to a coin flip (roughly 50/50) from above 63% earlier in the week.
• U.S. spot Bitcoin ETF inflows: approximately $277 million on Thursday.
• Weekly performance: Bitcoin up roughly 1%, ether and XRP flat, solana and TRON down nearly 3%.

What triggered the rally

Markets shifted after Fed Governor Christopher Waller suggested he would support keeping rates steady if price pressures continued to ease. The comment caused bond yields to fall and pushed buyers toward risk assets like stocks and crypto.

According to the CME FedWatch tool, traders now see the odds of a September rate increase at about even, compared to the higher odds earlier in the week.

Institutional flows remain mixed

U.S. spot Bitcoin exchange-traded funds (ETFs) received about $277 million on Thursday. ETFs are investment funds that track Bitcoin's price, allowing traditional investors to gain exposure without owning the cryptocurrency directly. However, inflows had alternated between positive and negative over the previous four sessions. Data shows buying has not yet been consistent enough to confirm strong institutional demand.

Broader market context

Global stocks continued to rise, with MSCI's Asia Pacific gauge climbing nearly 1%. The dollar stabilized after hitting its lowest point since May. In Asia, the Japanese yen strengthened about 2%, erasing a month of decline. Traders increased bets on potential rate hikes from the Bank of Japan.

A stronger yen typically reduces the liquidity available for risk assets. Bitcoin absorbed this shift without losing its Friday gains.

Why this matters

The rally highlights how sensitive crypto markets remain to U.S. interest rate expectations. Lower odds of a rate hike generally support assets like Bitcoin. The key question for the market is whether ETF inflows will remain positive through the end of the week, which would signal that institutions view the rate outlook shift as durable rather than a temporary rebound.

What is still unclear

It remains unconfirmed whether the current ETF inflows represent a sustained trend or a one-day rebound. Additionally, the impact of a strengthening yen on crypto liquidity over the coming weeks is yet to be seen.

Sources

• CoinDesk