Bitcoin (BTC) surged past $95,000 on Wednesday as softer-than-expected U.S. inflation data and strong ETF inflows boosted market optimism.
Ethereum (ETH) rose above $3,300, while total crypto market capitalization climbed to $3.27 trillion. Altcoins, including Dash and Story, posted gains of 30% or more.
Inflation Data Eases Fed Pressure
The rally gained momentum after fresh U.S. inflation data came in softer than expected, easing pressure on the Federal Reserve as it considers its next interest rate move.
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Core consumer price index (CPI) rose 0.2% in December and 2.6% from a year earlier, both slightly below forecasts, according to the Bureau of Labor Statistics report. Headline inflation showed the same increase, also undershooting expectations.
The softer-than-expected report reinforced expectations that inflation is easing, raising hopes the Fed may shift toward rate cuts or a more dovish policy, which supports risk assets as borrowing costs fall and investors pursue higher returns.
ETF Inflows Signal Institutional Confidence
U.S. spot Bitcoin ETFs recorded a sharp surge in daily net inflows on Tuesday, totaling $753.73 million. This marks one of the largest single-day inflow figures since October 7, just days before a historic crypto market sell-off that triggered more than $19 billion in liquidations.
U.S. spot Ethereum ETFs also posted a recovery, recording inflows for the first time after three consecutive days of outflows. However, the figures were more modest, with net inflows reaching $129.99 million.
The renewed inflows into both Bitcoin and Ethereum ETFs reversed the recent outflow trend, signaling a rebound in institutional demand and driving a notable increase in cumulative ETF assets.
Short Liquidations Add Fuel
Over the past 24 hours, more than $593.7 million in short positions were liquidated, much of it happening rapidly during the recent surge, driving further upward pressure as traders were forced to cover.
According to CoinGlass data, total liquidations in the same period reached $686.58 million, with leveraged shorts making up over 86% of the total. Long liquidations were much smaller, totaling just $92.86 million.
Short liquidations were split fairly evenly between Bitcoin and Ethereum, with $294.69 million in Bitcoin and $214.32 million in ETH.
Why This Matters
The rally signals renewed institutional confidence and suggests investors are betting on easing inflation and potential Federal Reserve rate cuts.
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People Also Ask:
Lower-than-expected inflation reduces pressure on the Federal Reserve to raise interest rates, which can make riskier assets like cryptocurrencies more attractive.
ETF inflows occur when investors buy shares of crypto exchange-traded funds. Large inflows signal strong institutional demand and can push crypto prices higher.
A short liquidation happens when traders covering their losing short positions are forced to buy the asset, often creating upward price momentum.
In the latest rally, top performers included Dash, Story, PEPE, Optimism (OP), Internet Computer (ICP), and Ethena, all showing notable gains.
