Bitcoin’s price on Friday shot above $81,000 — despite a week of setbacks for the crypto industry.
The biggest coin was recently trading for $80,982, after jumping as high as $81,055 at one point Friday morning in New York. Over the past 24 hours, it has risen by nearly 6%.
Its surge comes after lawmakers on Tuesday blocked long-awaited crypto legislation, the Clarity Act, and the Federal Reserve on Wednesday hiked interest rates.
Digital asset industry bigwigs had long called for clear rules to regulate the crypto space and the Clarity Act — which wants to divide oversight between regulators — aimed to do that. But lawmakers blocked the landmark digital asset market structure bill in a procedural vote.
And the Federal Reserve increased borrowing costs for the first time due to skyrocketing inflation in the U.S. The central bank’s chair, Kevin Warsh, said that price stability in the U.S. was the Fed’s number one priority.
“The plain fact is that inflation is too high, and has been for too long,” Warsh said. “This summer’s inflation readings do not tell me that underlying trends have meaningfully improved.”
Bitcoin has in the past done well in a low interest rate environment because it means there is more liquidity to trade the asset.
While Bitcoin’s price dipped initially news of the Clarity Act blockage and Fed’s move, it shot up on Friday.
Bitcoin exchange-traded funds in the U.S. have so far this week experienced net negative flows, with investors cashing out nearly $427 million from the vehicles, according to Farside Investors data.
Flows on Thursday turned positive, with investors chucking nearly $160 million at the funds following two days of consecutive outflows.
In a research note Thursday, asset manager Grayscale said that it didn’t expect bitcoin’s price to be hurt by the Fed’s decision because the move reflects a mid-cycle adjustment, not a cyclical change.
And despite lawmakers blocking the Clarity Act, regulators like the SEC are already pushing ahead with pro-crypto regulation.