Bitcoin's US$81,000 Fizzles as Fed Fears Return

Bitcoin's surge to US$81,000 has fizzled out as fears of higher interest rates resurface. The world's largest cryptocurrency dropped to around US$78,000-US$79,000 on Monday after reaching a three-month high of US$81,326.81 on August 28.

The rapid decline follows Federal Reserve Chair Kevin Warsh's Jackson Hole address, which reinforced the central bank's commitment to bringing inflation back to its 2% target. Warsh's comments changed market expectations for US monetary policy, leading traders to increase bets that the Fed could raise interest rates at its September meeting.

Higher interest rates typically present a headwind for cryptocurrencies and other risk assets as they increase returns on cash and government bonds. The move also affected crypto-linked equities, with companies like Coinbase, Galaxy Digital, and several Bitcoin miners experiencing sharp declines during Friday's session.

However, institutional demand remains a significant counterweight to macroeconomic pressure. US spot Bitcoin exchange-traded funds recorded eight consecutive sessions of net inflows totaling around US$2.8 billion, their longest buying streak since April.