Why Is the Crypto Market Rallying Today as Bitcoin Nears $80K?

The crypto 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. ETF inflows, improving macro expectations and heavy short liquidations have combined to strengthen the latest move.

Crypto Market Rally Happening as Investors Buy the Dip

One main reason why the crypto market rally is going on is that investors are actively buying the dip since most of them were down by double digits from their peak. Bitcoin price bottomed at $57,000 after peaking at $126,300 earlier this year. Ethereum bottomed at $1,515, while XRP moved slightly below $1.

Most of the sell-off happened at a time when technology stocks like SanDisk, Nvidia, and Marvell were going parabolic. At the time, demand for cryptocurrencies dropped, with ETF outflows rising.

Now, however, with the stock market being highly volatile, many investors are buying the dip as they rotate from the stock market to crypto.

This dip buying is also happening after top coins formed some bottoming patterns. For example, as the chart below shows, BTC formed an inverted head-and-shoulders pattern, which often leads to a bullish reversal.

Bitcoin and Ethereum ETF Inflows are Rising

Meanwhile, American stocks have started buying spot Bitcoin and ETFs, a sign that they expect these coins to go up over time. Spot Bitcoin ETFs, led by BlackRock’s IBIT, added $606 million in inflows on Thursday. They have now had over $1.6 billion in inflows this week, bringing the monthly inflow to over $2.07 billion.

Ethereum ETFs, also led by BlackRock’s ETHA, had over $220 million in inflows on Thursday, bringing the four-day figure to over $500 million. Other smaller altcoins like those tracking XRP, Solana, and Dogecoin have also had substantial inflows in the past few days. These inflows have led to more demand for top coins at a time when the amount of Ethereum and Bitcoin in circulation has dropped.

Falling Odds of Federal Reserve Rate Hikes

The crypto market rally is happening as investors react to the recent macro data, which have led to lower odds that the Federal Reserve will hike interest rates.

Polymarket data shows that odds of a cut have dropped below 50% recently. This happened after the US published the latest jobs, inflation, and retail sales report. The data showed that the economy lost 23,000 jobs last month. Another report showed that inflation slowed moderately last month. And finally, a report revealed that retail sales slumped in July.

Therefore, some Fed officials believe that hiking interest rates will 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 CLARITY Act Passing

Meanwhile, crypto investors are reacting to this week’s meeting between President Donald Trump and top executives like Robinhood, Coinbase, and Ripple Labs. This meeting focused on the CLARITY Act, which has stalled in the Senate in the past few months.

Trump maintained his support for the act, leading to a modest uptrend in the odds of it becoming law later this year. Odds have jumped to 30% in the past few days.

Still, there is a risk that the bill will not pass, as Democrats have opposed parts of it, insisting that it must include an ethical provision that prevents Trump from launching his tokens.