On the Chain: Bitcoin surges past US$81,000 as rate fears ease

Bitcoin has broken above US$81,000 in a sharp risk-on rally as falling US Treasury yields, a weaker dollar and easing expectations for another Federal Reserve interest rate hike brought buyers back into cryptocurrency markets.

The world’s largest cryptocurrency was trading around US$81,026, up about 4.7%, after reaching its highest level since mid-May. Ethereum climbed 4.5% to about US$2,501, while XRP jumped more than 9% to US$1.46 and Solana added almost 6% to US$105.

The rally marks a significant turnaround after Bitcoin had fallen towards US$76,000 earlier in the week amid rising bond yields, geopolitical uncertainty and concerns the Federal Reserve could be forced to tighten monetary policy again.

Waller comments trigger risk-on move

The catalyst came from Federal Reserve governor Christopher Waller, who indicated he would favour keeping rates unchanged at the September meeting if upcoming inflation data showed continued progress towards the Fed’s target.

His comments prompted traders to scale back expectations for a rate increase and sent Treasury yields lower.

The US 10-year yield retreated towards 4.75% from around 4.82% a day earlier, while the two-year yield dropped towards 4.33%. The US dollar also weakened, with the DXY dollar index falling below 99.