As the week comes to a close, the cryptocurrency market is experiencing a wave of enthusiasm. A sequence of positive developments has invigorated the market, instilling a sense of optimism among investors. Bitcoin Exchange-Traded Funds (ETFs) witnessed an unprecedented $1.38 billion in net inflows on Thursday, following the election of Donald Trump as the President of the United States. The momentum around Bitcoin continues to build as it reaches new heights.
ETF Inflows and Fed Rate Cut Propel Bitcoin to New Highs
Leading the charge is BlackRock’s IBIT, which garnered over $1.1 billion in net inflows — a record since its inception in January. Cumulative net inflows across all ETF products have surpassed the $25 billion mark for the first time, illustrating a strong investor appetite for cryptocurrency assets. Remarkably, none of the twelve tracked ETFs reported any net outflows during this period.
Adding to the market’s buoyancy was a widely anticipated 25 basis point cut by the Federal Reserve. This monetary policy decision further fueled Bitcoin’s ascent, pushing its value to an unprecedented $77,000, as highlighted in a recent broadcast by QCP. Typically, such a rate cut enhances liquidity in the market and weakens the dollar, both of which favor risk assets like Bitcoin.
In tandem with Bitcoin’s rise, Ethereum (ETH) ETFs also experienced significant inflows, amounting to $78 million, following Trump’s election victory. Ethereum’s price surged over 10% on Thursday, buoyed by expectations of deregulation and pro-crypto policies under Trump’s administration, bolstering investor confidence in the crypto sector.
Market Adjustments: Are Investors Pulling Back?
Despite the bullish trend, there are signs that investors might be re-evaluating certain “Trump trades.” The dollar’s reversal of its post-election gains and the stabilization of Treasury yields within recent ranges indicate a cautious approach among market participants. Concerns over potential fiscal policies, such as Trump’s proposed 60% tariff on China and the escalating national debt, are causing investors to reconsider the risk premium associated with Bitcoin compared to equities. This shift could position Bitcoin to potentially outperform other risk-on assets.
The Sustained Bullish Sentiment in Bitcoin
The ongoing optimism surrounding Bitcoin is creating a positive feedback loop. As ETF inflows continue to rise, Bitcoin prices benefit, which in turn attracts more retail investors and systematic fund purchases. This cycle could further reduce market volatility and sustain the bullish momentum.
The election of Donald Trump has undeniably sparked a significant upsurge in the cryptocurrency market. Bitcoin has reached a new all-time high, exceeding $76,400, while Ethereum has climbed above $2,839 and Solana is nearing $190. This surge reflects the market’s optimism regarding Trump’s pro-crypto stance, which is anticipated to cultivate a more favorable regulatory landscape for digital assets.
