The cryptocurrency market had a strong start to the new week. Bitcoin price rose 3 percent in the last 24 hours, rising above $122,000 and moving one step closer to its all-time high (ATH). It later retreated to $121,000. Meanwhile, Ethereum (ETH) reached $4,300, its highest level since December 2021. This rise is driven by both policy developments and technical and macroeconomic factors.
US President Donald Trump has directed the Department of Labor to investigate the possibility of adding cryptocurrencies, private equity, and other alternative assets to 401(k) retirement plans. Analysts note that this step could create room for crypto assets in the retirement portfolios of millions of US investors, significantly increasing institutional demand. As you may recall, the approval of spot Bitcoin ETFs in 2024 brought significant liquidity to the market. According to market data, spot Bitcoin ETFs saw net inflows of $253 million last week, while Ethereum ETFs saw net inflows of $461 million. These strong inflows, particularly in Ethereum, are bolstering expectations that the ETH price could approach its record high of $4,878 in the short term. Institutional firms are also active on the buying side; for example, SharpLink Gaming reportedly purchased 52,800 ETH over the weekend.
BTC is on the rise again after consolidating around $115,000 last week. The rally, which began during trading hours in the Asian region, accelerated with a breakout of $119,000, and the price quickly climbed above $122,000. During this period, $50 million worth of short positions were liquidated within two hours, further fueling the rally.
On-chain data also points to strong activity on the Bitcoin network. According to analyst Ali Martinez, 364,126 new BTC addresses were created daily, the highest level in a year.
Macroeconomic developments are eagerly awaited
On the macroeconomic front, all eyes are on the US Consumer Price Index (CPI) and Producer Price Index (PPI) data, which will be released this week. Market expectations are for inflation to rise by 0.3 percent in July. Economists note that Trump's tariffs have triggered price increases, particularly in items such as household goods and entertainment products.
While the likelihood of a rate cut at the Fed's September meeting is increasing, Polymarket data indicates a 40 percent probability of two 50 basis point cuts. However, following the revision in employment data, expectations for a more aggressive 75 basis point cut have risen from 8 percent to 23 percent.
Analysts emphasize that historically, July and August have been positive for Bitcoin in post-halving years, with a potential pullback in September leading to new highs in the final quarter of the year. The market will be closely watching to see whether this week's inflation data supports the rally.
