Bitcoin moved back above $81,000 on Friday as traders pulled back sharply on expectations for a Federal Reserve rate hike in September, lifting sentiment across the cryptocurrency market.

The largest cryptocurrency was trading above $81,000 during Asian morning hours, representing a gain of about 4% over 24 hours. CME FedWatch data showed that traders now see roughly a 50% probability of a September rate increase, compared with more than 63% earlier in the week.

The change in rate expectations pushed bond yields lower and encouraged investors to rotate back into riskier assets.

Fed Governor Christopher Waller helped reinforce the shift, saying he would support leaving interest rates unchanged if inflation continued to moderate. Treasury bonds and gold also retained the gains recorded during the previous U.S. trading session.

Zcash Emerges as Top Performer

Zcash was the biggest winner among the major cryptocurrencies, gaining nearly 15% in the past day and roughly 20% over the week. The token has substantially outpaced most of the market during its recent climb.

Hyperliquid’s HYPE rose about 6%, while XRP added nearly 6%. Ether, BNB and dogecoin each advanced between 4% and 5%.

Solana gained almost 3%, while TRON increased just over 1%, making it the weakest performer among the leading tokens.

Despite Friday’s rally, weekly returns remained relatively subdued. Bitcoin was up roughly 1% over seven days, with ether and XRP little changed. Solana and TRON were both down close to 3%, according to CoinDesk data.

ETF Inflows Offer Mixed Signal

U.S. spot Bitcoin ETFs recorded approximately $277 million in net inflows on Thursday, based on preliminary figures. The result came after four sessions in which inflows and outflows alternated.

That pattern suggests investors have yet to establish a sustained buying trend. A longer stretch of positive ETF flows could provide greater confirmation that institutional demand is strengthening.

Risk sentiment also improved across traditional markets. MSCI’s Asia Pacific index climbed nearly 1%, while the All Country World Index extended its winning streak to three sessions.

The dollar steadied after falling to its lowest level since May. Meanwhile, an index tracking Asian currencies reached its strongest point since October 2024.

Yen Strength Remains in Focus

The Japanese yen continued to attract attention after jumping about 2% on Thursday, reversing roughly a month of declines. Traders increased expectations for additional Bank of Japan rate hikes and remained alert to the possibility of intervention by Japanese authorities.

The currency later surrendered some of its gains, trading around 156.35 per dollar after reaching 155.30 during the previous session.

A stronger yen can put pressure on carry trades, potentially reducing liquidity available for risk assets such as Bitcoin. So far, however, BTC has managed to absorb the currency move while maintaining its recovery.

The direction of Bitcoin ETF flows in the final sessions of the week could help determine whether the latest rebound represents a lasting improvement in risk appetite or simply a short-term reaction to changing rate expectations.