This Week in Bitcoin: BTC Blasts Off Ahead of Trump Inauguration

Bitcoin had an exciting week, finishing off strong by climbing above $105,000 per coin just ahead of Donald Trump's re-inauguration as President. As he has presented himself as a pro-crypto candidate during his campaign, this has fueled interest in the cryptocurrency.

The week began on a slow note, with Bitcoin trading at just under $90,000. Traders were apprehensive about the Federal Reserve's plans concerning interest rates for the year. This caution caused Bitcoin to drop to its lowest price in two months.

However, a report released on Wednesday revealed that inflation had risen, with the Consumer Price Index increasing by 2.9% over the year ending December. This news led traders to believe that another interest rate cut by the Fed could be on the horizon.

Historically, Bitcoin has performed well when interest rates are low, which makes it more appealing to investors. As speculation grew regarding potential rate cuts, Bitcoin began to recover, surpassing $99,000 and eventually reclaiming the $100,000 threshold.

Additionally, anticipation of executive orders related to cryptocurrency from Trump during his first week back in office contributed to this surge in Bitcoin's price.

ETF Flows

Significant investment into Bitcoin is currently coming from exchange-traded funds (ETFs). These products tend to influence market sentiment considerably due to the U.S. economy's strength. Early in the week, many millions were withdrawn from these funds as investors reacted cautiously to the Fed's outlook.

However, on Wednesday, this trend reversed, with a massive inflow of $755 million into the funds, suggesting renewed investor confidence. Thursday saw another impressive day with an influx of $626 million, which was topped by an outstanding performance on Friday.

Mining Difficulty Peaks

Not only did Bitcoin's price rise this week, but the difficulty of mining Bitcoin also hit a record high. This increased difficulty, now at 110.45 trillion, signifies that it is more challenging than ever to add new blocks to the blockchain.

In the mining sector, numerous computers worldwide compete to solve intricate mathematical problems, essential for adding new blocks. A rising mining difficulty indicates vibrant and secure network activity.

Bitfinex Hack Update

Another important piece of news is the Department of Justice's announcement regarding the recovery of Bitcoin stolen in the notorious 2016 Bitfinex hack. The DOJ stated that the recovered funds should be returned to the exchange, with a notable amount of roughly 90,000 Bitcoin currently available.

This incident involved Ilya Lichtenstein stealing about 120,000 Bitcoin. His wife, Heather Morgan, assisted in laundering some of the funds. While Bitfinex claims it has compensated affected customers years ago through a repayment initiative, opinions among customers vary, especially given Bitcoin's current value increase.

Gensler Disses Crypto - But Not Bitcoin

Gary Gensler, the SEC Chair seen as a critical figure in the cryptocurrency space, has announced he will soon be stepping down. In a recent interview, he asserted that while many cryptocurrencies could be classified as unregulated securities, Bitcoin might ultimately be treated more like a commodity, akin to gold.

He remarked, "We have Bitcoin. It might be something else in the future, as well," drawing attention to its longstanding acceptance in financial markets.

Trump's Executive Order

Reports suggest that Trump plans to sign an executive order focused on the cryptocurrency industry upon his return to office. This strategy may involve establishing a working group among regulators to coordinate on regulatory issues regarding cryptocurrencies.

Throughout his campaign, Trump has committed to supporting Bitcoin and the broader crypto sector.

Coinbase Bitcoin Loans

In addition, Coinbase, the largest crypto exchange in America, has reintroduced Bitcoin-backed loans after discontinuing them two years ago. With this service, investors can use their Bitcoin as collateral to borrow up to $100,000 in USDC instantly.

The new loan feature will be facilitated by Morpho, a lending protocol developed on Base, Coinbase's Ethereum layer-2 network.

Bitcoin, Trump, ETF, mining, inauguration