The cryptocurrency market rally accelerated on Friday as Bitcoin climbed toward $80,000 and several altcoins extended their weekly gains. BTC reached about $79,463, its highest level in roughly three months, after rising more than 20% over the past week. Ethereum, XRP and several higher-beta tokens also advanced as capital returned to digital assets. The push toward the $80,000 level was reinforced by heavy liquidations of short positions — a dynamic in which leveraged bets against the coin are forcibly closed, adding further buying as prices rise. ETF inflows, improving macroeconomic expectations, softer U.S. economic data and renewed regulatory support have combined to strengthen sentiment toward crypto assets.

Investors Are Buying the Dip

A main driver of the rally is active dip-buying, with most major cryptocurrencies still down by double digits from their peaks. Bitcoin bottomed at $57,000 after peaking at $126,300 earlier this year. Ethereum bottomed at $1,515, while XRP moved slightly below $1.

Much of the sell-off took place while technology stocks such as SanDisk, Nvidia and Marvell were going parabolic. At the time, demand for cryptocurrencies dropped and ETF outflows rose. Now, with the stock market highly volatile, many investors are rotating out of equities and into crypto.

Dip-buying is also occurring after top coins formed bottoming patterns. BTC has formed an inverted head-and-shoulders pattern, a formation often associated with bullish reversals.

Bitcoin and Ethereum ETF Inflows Are Rising

U.S. investors have begun buying spot Bitcoin ETFs, a sign that they expect these coins to rise over time. Spot Bitcoin ETFs, led by BlackRock's IBIT, added $606 million in inflows on Thursday, Aug. 20, extending a four-day inflow streak. The funds have now drawn more than $1.6 billion in inflows this week, bringing the monthly total above $2.07 billion.

Because spot crypto ETFs hold the underlying coins and trade through ordinary brokerage accounts, their daily flow figures have become one of the most closely watched gauges of U.S. demand for digital assets, and a main channel through which traditional finance connects to the crypto market.

Ethereum ETFs, also led by BlackRock's ETHA, attracted more than $220 million on Thursday, bringing their four-day total above $500 million. Smaller funds tracking XRP, Solana and Dogecoin have also posted substantial inflows in recent days. The increased demand for top coins comes at a time when the amount of Ethereum and Bitcoin in circulation has dropped.

Falling Odds of a Federal Reserve Rate Hike

Investors are also reacting to recent macroeconomic data, which have lowered the odds that the Federal Reserve will hike interest rates. Polymarket data shows that odds of a cut have dropped below 50% recently.

Polymarket is a prediction market where users wager on outcomes such as central-bank decisions, and its pricing is widely tracked as a real-time read on market expectations. Expectations about interest-rate policy are a routine consideration in how investors position across risk assets, cryptocurrencies included.

The shift followed the release of the latest U.S. jobs, inflation and retail sales reports. The data showed that the economy lost 23,000 jobs last month, that inflation slowed moderately last month, and that retail sales slumped in July. Some Fed officials believe that hiking interest rates would lead to a substantial economic contraction. The challenge, however, is that inflation may remain higher for longer now that diesel and gasoline prices are elevated.

Rising Odds of the CLARITY Act Passing

Crypto investors are also responding to this week's meeting between President Donald Trump and top executives from Robinhood, Coinbase and Ripple Labs. The meeting focused on the CLARITY Act, market-structure legislation that would clarify when a digital asset counts as a security versus a commodity and divide oversight between the SEC and the CFTC. The bill passed the House but has stalled in the Senate in the past few months. Trump maintained his support for the act, producing a modest uptrend in the odds of it becoming law later this year; those odds have jumped to 30% in the past few days.

Still, there is a risk that the bill will not pass. Democrats have opposed parts of it, insisting that it must include an ethical provision that prevents Trump from launching his tokens. For now, the same factors behind this week's rally — ETF flows, macroeconomic releases and the CLARITY Act's fate in the Senate — form the near-term checklist for crypto investors.

Source: The Market Periodical