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

This week, Bitcoin has seen some significant movement, finishing strong by temporarily soaring above $105,000 per coin. This surge comes just days before Donald Trump—who has positioned himself as a pro-crypto candidate—supports his inauguration for a second term on Monday.

However, the week did not start well for Bitcoin. At the beginning, it struggled and dropped to a two-month low, falling below $90,000. This decline was attributed to traders being wary of the Federal Reserve's potential actions regarding interest rates this year.

On Wednesday, new economic data revealed that inflation had increased at the end of last year, with the Consumer Price Index rising by 2.9% over the 12 months ending in December. This news led traders to believe that another interest rate cut by the Federal Reserve could be likely.

Bitcoin has a history of performing well in a low interest rate environment. As a result, the possibility of lower borrowing costs made Bitcoin more appealing. This optimism helped the cryptocurrency rebound and surpass $99,000, eventually reclaiming the $100,000 mark and continuing its upward trajectory.

Additionally, reports that Trump intends to issue cryptocurrency-related executive orders during his first week in office contributed to the asset's rise in value.

ETF Inflows

A significant portion of the recent investment in Bitcoin has come through exchange-traded funds (ETFs). The United States hosts the largest economy, and major investments into these products can considerably influence market sentiment.

At the start of the week, there were significant outflows from these funds, likely caused by investors' concerns about the central bank's next steps. However, on Wednesday, the flow reversed, with $755 million entering the funds, according to Farside Investors data. Thursday saw another impressive influx of $626 million, but Friday outperformed them all with even more inflows.

Mining Difficulty Peaks

This week also saw a notable increase in Bitcoin's mining difficulty, which reached a new high of 110.45 trillion. This indicates that it is now more challenging than ever for miners to create new blocks.

In the mining community, computers worldwide strive to solve complex mathematical problems to add new blocks to the blockchain. A rise in mining difficulty means the network is operating efficiently.

Bitfinex Hack Update

In other developments, the Department of Justice announced that the Bitcoin recovered from the infamous 2016 Bitfinex hack should be returned to the exchange. The authorities noted that there were no "victims" in this case, where Ilya Lichtenstein stole approximately 120,000 Bitcoin, valued at over $12 billion today, with the help of his wife, rapper Heather "Razzlekhan" Morgan.

About 90,000 Bitcoin was ultimately recovered and could return to Bitfinex, which had previously compensated its customers through a repayment program. However, some people do not agree with this stance, especially as Bitcoin's value has surged in recent years.

Gensler's Crypto Stance

SEC Chair Gary Gensler, regarded as a significant figure against crypto, is on his way out and will soon be replaced. In an interview with CNBC, he stated that while many cryptocurrencies may be viewed as unregulated securities, Bitcoin could eventually be traded like commodities such as gold.

He hinted that Bitcoin could evolve further, suggesting a comparison with how gold has been traded for thousands of years.

Trump's Executive Order

Sources have indicated that the incoming president aims to sign a crypto-related executive order on his first day in office. A series of reforms is being considered, some of which have not been reported before. These could involve directing regulators to form a crypto working group to create a consistent approach regarding the industry.

The new president campaigned on a promise to support the Bitcoin community and the broader cryptocurrency landscape.

Coinbase Bitcoin Loans

Finally, Coinbase, the largest crypto exchange in the U.S., has resumed offering Bitcoin-backed loans, having previously discontinued the service two years ago. This new offering allows investors to use their Bitcoin as collateral to borrow up to $100,000 in USDC, a stablecoin, instantly.

The new lending feature will utilize a third-party lending protocol called Morpho, developed on Base, which is an Ethereum layer-2 network that Coinbase has incubated.

Bitcoin, Trump, Inflation, Mining, ETF