Bitcoin Recovery Gathers Steam as Trump Era Optimism and Major ETF Inflows Support Rally

Bitcoin has surged back into the spotlight as traders anticipate the new U.S. administration and institutional capital flows surge into the digital asset. After hitting a low of just under $92,000 in late December following a sharp decline from the year-end peak near $109,000, the world’s largest cryptocurrency has staged a notable recovery. The asset gained 10% over the past week, reclaiming the $102,000 threshold and erasing nearly all the losses that accumulated in early December.

This turnaround reflects more than just sentiment shifts—major capital flows are fueling the move. U.S.-listed Bitcoin exchange-traded funds attracted an exceptional $987 million in new inflows on a single Monday in late December, marking their strongest day since November 21. Fidelity’s FBTC product led the charge with $370 million, followed by BlackRock’s IBIT capturing $209 million and Ark Invest’s ARKB pulling in $71 million. Notably, nine of the twelve Bitcoin ETF products recorded positive inflows that day, with zero experiencing outflows—a sign of overwhelming investor appetite during what traders consider a critical juncture for the market.

Institutional Capital and Political Expectations Drive Bitcoin ETF Momentum

The resurgence of interest in Bitcoin ETFs stems from a confluence of factors. Traders returning from holiday breaks have resumed their buying programs in anticipation of Donald Trump’s presidency, which markets view as potentially favorable for cryptocurrency policies. Jeff Mei, chief operating officer at crypto exchange BTSE, observed that after the Federal Reserve’s more cautious December outlook briefly dampened enthusiasm, “traders have wrapped up their vacations and are back to work, resuming purchases of Bitcoin, crypto, and stocks in a bullish trend as we approach a new political chapter.” This capital redeployment has historically preceded stronger performances in alternative cryptocurrencies, signaling that risk appetite is making a comeback across the digital asset spectrum.

The influx of funds into Bitcoin products also reflects a structural shift: retail and institutional investors are actively repositioning into digital assets after a cautious December. With nine out of twelve major Bitcoin ETF vehicles recording inflows and none experiencing withdrawals, the data tells a story of genuine conviction rather than speculative noise.

Technical Milestones: Traders Lock Eyes on $109K Target

From a technical perspective, market participants are increasingly focused on specific price levels that could confirm a sustainable uptrend. Alex Kuptsikevich, chief market analyst at FxPro, highlighted that “the market structure resembles a classic corrective phase completing, with a resumption of growth occurring from the 61.8% Fibonacci retracement level calculated from the rally beginning in November.” He emphasized that confirmation of an extended Bitcoin rally hinges on whether prices can decisively break through the historical peak near $109,000. Once that threshold is breached, Kuptsikevich suggests the next leg higher could accelerate, particularly after the $100,000 psychological barrier is cleared.

Fibonacci-based technical levels—derived from mathematical ratios found in natural patterns—have long been used by traders to identify potential turning points and support-resistance zones. While the predictive value of these levels remains debated among market professionals, their widespread adoption can create self-fulfilling prophecies, as large numbers of traders react to the same technical signals.

Macro Headwinds Temper Near-Term Volatility Expectations

Despite the positive price action, the broader macro environment presents a complex picture. Augustine Fan, head of insights at SOFA, indicates that “market volatility is expected to remain subdued until the U.S. Nonfarm Payrolls report drops on Friday, which many expect will mark the true start of the trading year once decision-makers return fully to their desks.” Strong payroll data could strengthen the dollar and potentially trigger higher interest rates, creating headwinds for risk assets like Bitcoin and equities.

Looking further ahead, Fan notes that “the month’s most significant volatility event is anticipated around the Fed’s policy meeting at month’s end, as economic indicators begin pricing in ‘soft landing’ signals.” This suggests that while January may see modest consolidation, February and beyond could bring more significant repricing as macro data accumulates and central bank guidance becomes clearer.

Broader Crypto Market Signals Renewed Appetite for Risk

Bitcoin’s recent strength has occurred alongside a broader market rotation. Ethereum, Solana, Cardano, and Dogecoin have all significantly outpaced Bitcoin’s performance, indicating that traders are willing to take on additional risk in higher-volatility tokens. The CoinDesk 20 index, which tracks the largest digital assets by market capitalization, posted modest gains of 0.53%, suggesting that while enthusiasm exists, it remains selective rather than universally broad-based.

However, analysts caution that despite the short-term bounce, underlying fragility persists. Stablecoin supplies remain relatively flat, suggesting that fresh capital onboarding may be limited. Additionally, the level below $60,000 represents a critical support zone; a breakdown there could trigger cascading liquidations in leveraged Bitcoin positions, potentially accelerating any selloff. These structural vulnerabilities suggest that while the near-term technical setup appears constructive, the medium-term outlook remains conditional on sustained macro support and continued capital inflows.

Bitcoin currently trades near $68,490, up approximately 4.65% over the past 24 hours and 2.50% over the past week. The path forward for the cryptocurrency depends on whether the current recovery can maintain momentum through the data-rich calendar ahead while institutional sentiment—as evidenced by the ETF flow data—continues to support further accumulation at higher levels.