Bitcoin Hits Record $126K as ETFs and Dollar Drive Rally

The milestone marks a remarkable surge for Bitcoin (BTC), which has nearly doubled in value over the past year as part of its powerful upward run.

Overview

Bitcoin (BTC) extended its historic rally on Monday, climbing to a fresh all-time high of $126,223 before easing slightly to trade near $124,000 by late afternoon. The move capped a blistering 15% weekly gain and underscored a perfect storm of bullish catalysts: record-setting ETF inflows, a weakening US dollar, and growing uncertainty surrounding the ongoing US government shutdown.

The world’s largest cryptocurrency now trades more than $20,000 above its previous 2021 peak, pushing digital assets firmly back into mainstream investor focus. The rally has also spilt into other major tokens, lifting the broader crypto market to its strongest levels in more than two years.

Bitcoin’s momentum isn’t confined to dollar terms. The crypto also set new records against the euro (EUR 106,000) and Swiss franc (CHF 99,600), while posting similar milestones in Japanese yen. In Japan, optimism has surged as the country’s new prime minister signals a revival of Abenomics-style stimulus, which traders interpret as a shift toward looser monetary policy.

“The combination of global liquidity expansion and renewed appetite for hard, finite assets is setting the stage for an extended crypto cycle,”

wrote CoinDesk analyst Omkar Godbole.

The rally’s breadth highlights strong market confidence. Ether (ETH) jumped 4% to around $4,700, its highest level in three weeks, with traders eyeing the $4,800–$5,000 range as the next major resistance.

Meanwhile, BNB has been the standout performer, surging more than 20% in the past week and notching new records above $1,240. The move underscores a broader rotation into ecosystem-focused tokens as traders seek exposure beyond BTC.

Dogecoin (DOGE) gained 6% to $0.26, XRP climbed toward $3, and Solana (SOL) advanced more than 12% over the past seven days.

The total crypto market capitalisation briefly topped $4.27 trillion before easing to $4.24 trillion, according to CoinMarketCap. Sentiment indicators remain upbeat, with the Crypto Fear & Greed Index at 71 (Greed) – high, but still short of euphoric territory. That suggests room for further upside without the signs of a blow-off top.

Institutional Inflows and Tight Supply Fuel the Rally

Unlike prior speculative spikes, analysts say this rally is being driven largely by institutional inflows through spot Bitcoin ETFs. According to data provider SoSoValue, weekly inflows topped $3.2 billion, the highest since November 2024 and the second-largest weekly total on record.

Since spot ETFs launched in January, cumulative allocations have surpassed $60 billion, illustrating deepening mainstream adoption.

Ryan Lee, chief analyst at Bitget, said, “Bitcoin’s climb above $124,000, fuelled by record ETF inflows, underscores growing institutional conviction and a maturing market structure.”

At the same time, long-term holders have started to sell modestly into strength. FxPro’s Alex Kuptsikevich cautioned that seasoned investors have been taking profits near current levels since mid-summer, suggesting supply could emerge if demand cools.

Still, BTC’s exchange balances have fallen to a six-year low of 2.83 million BTC, with over 170,000 BTC withdrawn in the past month – a strong sign that coins are moving to cold storage and off the market. That tightening supply dynamic, combined with steady ETF demand, appears to be reinforcing the current uptrend.

Global Uncertainty and a Weak Dollar Add to Bitcoin’s Momentum

The ongoing US government shutdown, now entering its second week, has injected a fresh dose of political uncertainty into markets. With key economic data releases delayed and fiscal policy in limbo, investors are hedging against potential instability, and this is a backdrop that has historically benefited hard assets such as gold and BTC.

During the 2013 shutdown, BTC nearly doubled while gold rose over 3%. The latest surge appears to echo that pattern, contrasting with the muted response seen during the 2018–19 closure.

Adding to the bullish mix, the US dollar index has weakened, easing pressure on dollar-denominated assets. Bond markets are also pricing in a more cautious Federal Reserve, as traders bet that political paralysis and softer economic data could prompt policymakers to pause further tightening.

For Bitcoin, that translates into a friendlier liquidity environment and a dovish bias that has historically preceded major bull runs.

As one trader put it, “At this point, $125,000 is both a magnet and a battleground – a psychological threshold that could define the next leg of Bitcoin’s story.”