Bitcoin fell back after a surge driven by ETF funds, dropping below $78,000

Bitcoin fell back on Friday afternoon, ending a strong rally driven by ETF inflows. As of Friday afternoon New York time, Bitcoin was at $77,379, down more than 3% in 24 hours, having reached a high of $81,281 earlier this week. Federal Reserve Chairman Kevin Warsh stated in his first major speech since taking office that there is "more work to be done" in combating inflation, which cooled market sentiment.

The previous rally was mainly driven by liquidity. The U.S. spot Bitcoin ETF saw a net inflow of $1.14 billion this week, with over $3 billion accumulated in the past 9 days, of which BlackRock's iShares Bitcoin Trust received the largest share. Last week, the U.S. Treasury announced it would double the size of its liquidity support repurchase operations, further boosting Bitcoin's rally.

Analysts believe this round of market activity is closely related to "currency devaluation trades"—investors view Bitcoin as a hedge against currency devaluation and excessive government spending. The total amount of U.S. Treasury debt surpassed $40 trillion for the first time this month, further reinforcing market concerns about the dilution of fiat currency purchasing power.