Bitcoin (BTC) closed last week at approximately $104,128, marking a 10.5% increase from the prior week’s close of around $94,280.

Bitcoin (BTC) closed last week at approximately $104,128, marking a 10.5% increase from the prior week’s close of around $94,280. Throughout the week, there was strong demand for BTC and the broader digital assets market, with Thursday emerging as the most bullish day.

On that day, BTC surged by around 6.4%, breaking above the $100,000 mark for the first time since early February. To a certain extent, this positive momentum was also reflected in BTC spot ETFs, which saw about $600 million in net inflow over the past week.

This marks the fourth consecutive week of net inflows in BTC spot ETFs, bringing the total net inflows since their inception to over $41 billion for the first time.

However, it’s worth noting that these inflows are relatively modest compared to the massive price swings observed in the crypto market. For instance, BTC price rose by about 40% over the past month, while ether (ETH) saw an even steeper increase of about 100% from its March lows.

“The scale and strength of the price recovery, combined with the light outflows from ETH ETFs and relatively moderate BTC ETF inflows, suggest that the recent surge in digital asset prices has been primarily driven by crypto-native activity, rather than institutional inflows via ETFs,” said Matteo Greco, a senior associate with Fineqia International in Canada, in an email to Chain Reactions.

What’s driving the rally in cryptocurrencies?

One of the key drivers behind this risk-on rally appears to be easing geopolitical and economic tensions globally. In particular, the US and UK recently announced a trade agreement that would reduce tariffs on a selection of British-made cars and allow limited quantities of steel and aluminium into the US tariff-free, while maintaining overall trade tariffs at 10%.

Additionally, Donald Trump announced that constructive discussions had taken place between the US and China in Switzerland, suggesting that the two nations may be moving closer to an agreement aimed at de-escalating tensions and potentially ending the ongoing trade war. A resolution here could significantly reduce the global economic strain that has stemmed from these commercial frictions.

Meanwhile, the US labour market remains resilient, prompting the Federal Reserve to hold interest rates steady in its latest meeting. The Fed also confirmed that a reduction in Quantitative Tightening is not currently being considered, citing strong economic data as the reason for maintaining its policy stance.

As a result, market expectations for Fed rate cuts in 2025 have been revised downward. The market now sees an equal probability of 50 or 75 basis points of rate cuts, compared to previous forecasts of 75 or even 100 basis points just a few days earlier.

“While no single factor stands out, there have been key developments,” said Nick Forster of Derive.xyz. “The China/US trade deal announced by the White House has signaled a potential cooling in the trade war, providing a boost to the market. ETH’s Pectra upgrade successfully launched, aiming to improve user experience and attract institutional interest, which is likely contributing to ETH’s price surge.”

In addition Coinbase (NASDAQ:COIN) was added to the S&P 500. This milestone highlights the growing mainstream adoption of digital assets, signaling increased confidence in the sector.