Bitcoin Breaks Above $85,000 as ETF Demand Defies Fed Rate Hike

Bitcoin's price has surged past $85,000, marking its highest level since late January. This climb is particularly notable given that it occurred despite two potential headwinds: the failure of the U.S. CLARITY Act to advance through the Senate and the Federal Reserve's first interest-rate hike since 2023.

Despite these challenges, Bitcoin has managed to break higher due in part to strong demand from exchange-traded funds (ETFs). In fact, after two days of ETF outflows following the CLARITY Act vote and the Fed decision, ETF demand quickly returned. U.S. spot Bitcoin ETFs recorded approximately $159.5 million of net inflows on September 17, followed by around $433 million on September 18.

The strong Friday inflow was enough to leave the week marginally positive, with approximately $6.2 million in net inflows for the week. The ETF market is increasingly becoming an important source of structural demand for Bitcoin, indicating that institutional investors continue to allocate capital toward the cryptocurrency even as monetary conditions remain restrictive.