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BTC/USD Price Movement
Bitcoin finished the week strong, briefly surging above $105,000 per coin just before Donald Trump’s inauguration for his second term on Monday.
It started the week sluggish, however, selling at a two-month low – below $90,000 – as traders were cautious over what the Federal Reserve plans for interest rates this year.
But new data dropped on Wednesday showing that inflation was indeed up at the end of last year, with the Consumer Price Index up 2.9% in the 12 months through December. This made another Fed rate cut seem more likely.
Bitcoin tends to do well in a low interest rate environment – or has done in the past – so if the Fed sees more reason to lower the borrowing costs, then Bitcoin could become more attractive. The asset then broke past $99,000 before continuing on to retake the $100,000 milestone and continue flying.
News that Trump would issue crypto-related orders on his first week in office also helped push the coin to where it is now.
ETF Flows
A lot of money – but not all – flowing into the Bitcoin space is coming via investors who buy shares in the new exchange-traded funds.
The world’s biggest economy has the most financial might – and big flows into the products tend to swing market sentiment.
At the start of the week – and end of last week – hundreds of millions left the funds as investors were apparently spooked about what the central bank would do next.
But then on Wednesday, the tide turned and a total of $755 million hit the funds, Farside Investors data shows. Thursday was also an epic day, with investors throwing another $626 million at the investment vehicles – but Friday topped them all with $1.4 billion.
Mining Difficulty Peaks
The price of Bitcoin wasn’t the only thing that rose this week: The mining difficulty of the biggest cryptocurrency also hit a new high. It currently stands at 110.45 trillion, meaning it’s harder than ever before to mine a new block.
In the world of mining, computers around the world race to solve complex mathematical problems in order for new blocks to be added to the blockchain. And if it gets harder for miners to complete that task, then the network is working as it should.
Bitfinex Hack Update
In other news, the Department of Justice said that the recovered Bitcoin stolen in the notorious 2016 Bitfinex hack should be returned to the exchange.
The feds said there were no “victims” in the case where Ilya Lichtenstein stole about 120,000 Bitcoin (today worth over $12 billion), while his wife, rapper and social media personality Heather “Razzlekhan” Morgan, helped launder some of the funds.
About 90,000 Bitcoin was ultimately recovered and could go back to Bitfinex, which said that it had made customers whole years ago via a repayment program. Not every customer agrees with that perspective, however, particularly with Bitcoin skyrocketing in value in the years since.
Gensler Disses Crypto – But Not Bitcoin
Widely regarded as the bogeyman of crypto, SEC Chair Gary Gensler is on his way out and will soon be replaced. In an interview Tuesday, the regulator told CNBC that while he views many cryptocurrencies as unregulated securities, Bitcoin may in the future be traded like commodities such as gold.
Alluding to how gold had been traded for 10,000 years, he said, “We have Bitcoin. It might be something else in the future, as well.”
Trump’s Executive Order
Sources told Decrypt that the incoming president is planning to issue a crypto-related executive order to help the industry on his first day in office. A raft of reforms are being pondered, some not previously reported, which could include instructing regulators to establish a crypto working group to get on the same page about the industry.
The incoming president campaigned on a promise to help Bitcoiners and the space as a whole.
Coinbase Bitcoin Loans
America’s biggest crypto exchange, Coinbase, has started Bitcoin-backed loans again – after discontinuing them two years ago. The loans allow investors to use their “digital gold” as collateral and borrow up to $100,000 in the USDC stablecoin instantly.
The new service will be powered by a third party: Morpho, a lending protocol on Base, the Ethereum layer-2 network that Coinbase incubated.
Conclusion
In conclusion, the past week was a significant one for Bitcoin, with prices surging above $105,000 and the mining difficulty reaching a new high. The news that Trump would issue crypto-related orders on his first week in office also helped drive prices up. Additionally, the SEC’s Gensler expressed a more positive view of Bitcoin, stating that it may be traded like a commodity in the future.
FAQs
Q: What is the current price of Bitcoin?
A: The current price of Bitcoin is above $105,000.
Q: Why did Bitcoin prices surge this week?
A: Bitcoin prices surged due to a combination of factors, including the news that Trump would issue crypto-related orders on his first week in office and the increasing mining difficulty, which makes it harder for miners to mine new blocks.
Q: What is the current mining difficulty of Bitcoin?
A: The current mining difficulty of Bitcoin is 110.45 trillion, making it harder than ever before to mine a new block.
Q: What is the status of the Bitfinex hack recovery?
A: The Department of Justice has said that the recovered Bitcoin stolen in the 2016 Bitfinex hack should be returned to the exchange.
