Bitcoin slid Friday afternoon, cooling down after a phenomenal run following huge investment from U.S. ETF buyers.
The leading cryptocurrency was trading for $77,379 on Friday afternoon in New York after dropping more than 3% over a 24-hour period.
Bitcoin hit a high this week of $81,281 but slowed down after Federal Reserve Chair Kevin Warsh gave his first major speech as head of the central bank — saying on Friday that he had “more work to do” to fight inflation.
The Bitcoin price has in the past dropped when the Federal Reserve thinks inflation is too high because it means less chance of a rate cut; the leading cryptocurrency typically does better in a low-interest rate environment.
JUST IN: ???????? U.S. Bitcoin ETFs have brought in $1.14 billion in inflows this week.
Over $3 billion has been added in the past 9 days!
Bitcoin started surging last week after the U.S. Treasury would at least double the size of its liquidity-support buyback operations. The announcement last week hurt the dollar but non-yielding assets have benefited.
Exchange-traded funds, managed by the likes of BlackRock, Fidelity, and Grayscale have received net positive inflows for nine days in a row, according to Farside Investors data. Last week was their best week since October — when bitcoin hit a new all-time high — and that run has continued into this week.
Since August 17, investors have thrown over $3 billion at the funds. BlackRock‘s iShares Bitcoin Trust received the lion’s share of the investment, but Morgan Stanleys new Bitcoin Trust — which debuted this year — also experienced significant inflows.
Analysts have said that the so-called debasement trade — when investors buy an asset as a way to hedge against a currency losing value — was leading investors to eye-up bitcoin again.
Investors taking part in the trade think that bitcoin, gold and other precious metals are a good way to protect themselves from excessive government spending.
Total U.S. debt crossed $40 trillion for the first time this month.