Cryptocurrencies rallied on Wednesday, with Bitcoin breaking through the psychological barrier of $100,000, fueled by renewed optimism surrounding the inauguration of Donald Trump's second presidency. The market sentiment was bolstered by mixed inflation readings from the U.S. and significant inflows into Bitcoin spot ETF products.
The crypto market is anticipating a more favorable regulatory environment under Trump's leadership. Expectations include the creation of a Strategic Bitcoin Reserve, changes to crypto accounting policies, approvals for altcoin ETF products, and pro-crypto executive orders.
The U.S. Bureau of Labor Statistics' inflation report also contributed to the market's positive momentum. Annual headline inflation rose to 2.9 percent from 2.7 percent in November, meeting market expectations. However, the core inflation rate unexpectedly declined to 3.2 percent from 3.3 percent.
Bitcoin spot ETF products in the U.S. saw inflows of $755 million on Wednesday, a significant increase from the $210 million outflows recorded the previous day. The Fidelity Wise Origin Bitcoin Fund (FBTC) led with near-record inflows of $463 million. Ether spot ETF products also saw inflows of $60 million, up from $1 million the day before.
The overall crypto market capitalization climbed 4 percent overnight to $3.48 trillion. Only one of the top 100 cryptocurrencies experienced an overnight loss of more than 1 percent.
Bitcoin gained over 2 percent overnight, trading at $99,048.13, approximately 9 percent below its all-time high. BTC has gained 6.7 percent in the past week. Ethereum rallied 3.9 percent in the past 24 hours, trading at $3,335.35, around 32 percent below its previous peak in November 2021. XRP, ranked third, surged 18.8 percent overnight, trading at $3.32, about 14 percent below its all-time high reached in January 2018.