Bitcoin’s week has been a microcosm of the crypto market’s volatility — surging to a record near US$124,500 on Thursday before plunging more than US$5,800, or 4%, in less than 24 hours, rattled by hotter-than-expected US wholesale inflation data. The world’s largest cryptocurrency has since clawed back part of those losses, hovering in the US$118,000–120,000 range and showing signs of stabilising as buyers step back in.
Ethereum, meanwhile, has managed to hold onto more of its recent gains. The number two token by market value briefly touched US$4,790, just shy of its all-time high, ending at US$4,634, and remains one of the best performers among major digital assets this year. Support has come from strong inflows into newly approved spot exchange-traded funds (ETFs), regulatory developments viewed as crypto-friendly and continued enthusiasm from institutional investors.
Market drivers: momentum meets macro headwinds
Bitcoin’s record run was underpinned by a combination of robust institutional demand, steady corporate treasury buying, and broader risk-on sentiment in equities. The rally pushed its year-to-date gain to around 26%, while Ethereum is now up roughly 36% for 2025.
But Thursday’s US producer price index (PPI) report, which showed wholesale inflation running hotter than economists had expected, proved a speed bump. The data tempered hopes for an oversized interest rate cut, prompting a wave of profit-taking in both traditional markets and crypto. Bitcoin fell as much as 4% from its peak, and Ether also slipped before finding its footing.
Despite the setback, crypto traders appear to be treating the pullback as a healthy consolidation rather than the start of a deeper sell-off, following weeks of near-vertical gains.
Bessent draws a line on US reserves
Adding a touch of policy intrigue to Bitcoin’s price moves were comments from US Treasury Secretary Scott Bessent clarifying the government’s approach to its Strategic Bitcoin Reserve. Bessent said Washington would not be making new Bitcoin purchases for now, but would also avoid selling existing holdings. Any expansion of the reserve, he added, would be achieved through “budget-neutral” means — primarily via seized or confiscated assets.
While the comments did not trigger a market-moving reaction, they were taken as a sign of a more entrenched role for crypto in the US government’s asset mix. Traders said the “no selling” stance helped steady sentiment in the aftermath of the post-PPI drop.
Ethereum’s edge: regulatory tailwinds and ETF traction
Ethereum’s performance this month has been shaped by a wave of developments that play to its strengths. The rollout of spot Ether ETFs in multiple markets has spurred a fresh round of institutional allocations, while recent regulatory signals — including clearer frameworks for stablecoins and decentralised finance protocols — have bolstered investor confidence in the token’s long-term utility.
Some analysts are even speculating that Ethereum could challenge Bitcoin’s dominance over the medium term. Its broader application base, from decentralised apps to smart contracts, combined with faster transaction settlement and network upgrades, could give it an edge if institutional adoption continues to deepen.
Still, Ethereum’s path higher will be influenced by the same macro currents that sway Bitcoin — including interest rate expectations, dollar strength and risk appetite in equity markets.
At a glance
- Bitcoin: Off record highs but steadying around US$119K–120K; +26% YTD
- Ethereum: Nearing all-time highs around US$4,790; +36% YTD
- Drivers: Institutional demand, ETF inflows, policy signals, macro data swings
- Watchpoints: Inflation trends, central bank policy, global regulatory shifts
Outlook
With inflation readings still shaping the macro backdrop and central banks treading carefully on rate policy, crypto markets are likely to see more of the same two-way volatility that has defined this week. Bulls will take comfort in the resilience shown after the PPI-induced dip, while bears will note that Bitcoin is still below its midweek highs and vulnerable to further macro shocks.
Ethereum’s ability to sustain its rally in the face of those headwinds — and its growing ETF-driven inflows — will be closely watched as the market weighs whether mid-2025 marks the start of a broader shift in crypto leadership.