Bitcoin closed the week strongly, briefly rising above $105,000 per coin, just before Donald Trump – who cast himself as a crypto-friendly candidate in the presidential race – is inaugurated for his second term on Monday.
However, it started the week slowly, selling at a two-month low – below $90,000 – as traders were careful about what the Federal Reserve plans to do this year regarding interest rates.
But new data decreased On Wednesday it emerged that inflation had indeed risen at the end of last year, with the consumer price index rising 2.9% in the 12 months to December. According to traders, that made a new interest rate cut by the Fed more likely.
Bitcoin typically does well in a low interest rate environment – or has done so in the past – so if the Fed sees more reason to lower borrowing costs, Bitcoin could become more attractive. The asset then broke past $99,000 before continuing to recapture the $100,000 mark and soar beyond.
News that Trump would issue crypto-related orders during his first week as president, he also helped the currency get to where it is today.
ETF flows
Much of the money (but not all of the money) flowing into the Bitcoin space comes via investors buying shares in the new exchange-traded funds.
The world’s largest economy has the most financial power – and big flows into its products tend to shift market sentiment.
At the beginning of the week – and at the end of last week – hundreds of millions left the funds as investors apparently feared what the central bank would do next.
But on Wednesday the tide turned and a total of $755 million ended up in the funds. Farside Investors data shows. Thursday was also an epic day, with investors throwing another $626 million at the investment vehicles, but Friday surpassed them all with
Mining difficulties peak
Bitcoin’s price wasn’t the only thing that rose this week: so did the mining difficulty of the largest cryptocurrency hit a new highlight. It currently stands at 110.45 trillion, meaning it’s harder than ever to mine a new block.
In the mining world, computers around the world race to solve complex mathematical problems so that new blocks can be added to the blockchain. And if it becomes more difficult for miners to complete that task, the network works as it should.
Bitfinex hack update
In other news: the Department of Justice said that the recovered Bitcoin stolen during the infamous 2016 Bitfinex hack should be returned to the exchange.
The FBI said there were no “victims” in the case in which Ilya Lichtenstein stole approximately 120,000 Bitcoin (worth more than $12 billion today) while his wife, rapper and social media personality Heather “Razzlekhan” Morgan helped in the laundering some of the money.
About 90,000 Bitcoin was eventually recovered and traced back to Bitfinex, which said it had made customers through a refund program several years ago. However, not every customer agrees with that perspective, especially as Bitcoin has skyrocketed in value in the years since.
Gensler disses crypto, but not Bitcoin
Widely regarded as the bogeyman of crypto, SEC Chairman Gary Gensler is on his way out and will soon be replaced. In an interview Tuesday, the regulator said told CNBC that while he considers many cryptocurrencies to be unregulated securities, Bitcoin could be traded like commodities like gold in the future.
Referring to how gold has been traded for 10,000 years, he said: “We have Bitcoin. It could be something else in the future.”
Trump’s executive order
Sources told Declutter that the new president plans to issue a crypto-related executive order to help the industry on his first day in office. A range of reforms are being considered, some of which have not previously been reported, including instructing regulators to create a crypto working group to gain alignment across the industry.
The new president campaigned on a promise to help Bitcoiners and the space as a whole.
Coinbase Bitcoin Loans
And America’s largest cryptocurrency exchange, Coinbase, has done just that started Bitcoin-backed lending again – after being halted two years ago. The loans allow investors to use their ‘digital gold’ as collateral and instantly borrow up to $100,000 worth of USDC stablecoin.
The new service will be powered by a third party: Morpho, a lending protocol on Base, the Ethereum layer-2 network that Coinbase incubated.
Edited by Andrew Hayward
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