The cryptocurrency market surged as BTC nears $100K, spurred by tempered inflation indicators and Trump administration prospects.

The cryptocurrency market witnessed a notable upswing, with its global capitalisation climbing back to $3.5 trillion, catalysed by the release of December's favourable US Consumer Price Index (CPI) data and increasing optimism about the incoming administration of President-elect Donald Trump. This upswing has been marked by Bitcoin pushing towards the $100,000 mark, as well as gains for major altcoins like XRP, Solana, and Dogecoin. Analysts attribute this resurgence in prices largely to December's CPI report, which showed a combination of an increase in inflation metrics alongside slightly moderated core inflation trends. Such figures, while indicating ongoing inflationary pressure, sparked renewed expectations about the Federal Reserve's potential motives for keeping interest rates steady, contributing to heightened investor sentiment.

Additional context for this surge stems from liquidations within the crypto derivatives markets, with traders holding short positions being caught off guard by a rally in prices. Short positions worth hundreds of millions were wiped out in a 24-hour streak, confirming that market expectations were misaligned with the newfound optimism. Larger liquidations, particularly in Bitcoin and Ethereum derivative contracts, have compounded the momentum, giving way to a broader stabilisation around key technical resistance levels supported by the market’s 50-day moving average. While this level offers a foundation for potential further gains, any resurgence in selling momentum may challenge this critical support structure.

Beyond immediate market dynamics, the incoming Trump administration has heightened expectations around the creation of a crypto-friendly regulatory framework, making cryptocurrency investments more favourable to institutional players and retail investors alike. Speculators further anticipate regulatory measures fostering broader adoption and possibly introducing a national Bitcoin reserve, steps that could reinforce the market's longer-term upward trajectory.

These dual factors—the CPI-triggered optimism within markets and anticipations of policy shifts—are collectively driving bullish sentiment. However, macroeconomic uncertainties remain a potential headwind, particularly as the Federal Reserve aims to reconcile inflation trends with its target rate. Market participants are advised to remain sensitive to upcoming economic indicators and statements from central bank officials that may influence this fragile uptrend. As the crypto market probes key thresholds, its near-term outlook hinges on its ability to maintain technical support levels while sustaining positive sentiment driven by structural policy excitement.