The crypto market woke up in full bull mode today, with global market capitalization climbing about 4.5% in the past 24 hours to reach roughly $3.35 trillion. A mix of cooler U.S. inflation data, improving regulatory outlook, and a massive wave of short liquidations helped spark the rally, lifting Bitcoin, Ethereum, and most major altcoins.
One of the biggest drivers behind today’s move was a large-scale short squeeze. More than $591 million worth of short positions were liquidated across the market as prices moved higher. Bitcoin alone accounted for around $266.58 million of those liquidations. Traders who short crypto are betting that prices will fall, but when the market moves sharply in the opposite direction, those positions get wiped out, forcing traders to buy back assets at higher prices. That rush to exit losing trades often amplifies rallies — exactly what the market saw today.
Bitcoin led from the front. The world’s largest cryptocurrency briefly pushed to a two-month high near $95,800 before cooling slightly to trade under $95,000 at press time, still up about 4.5% on the day. Breaking above the stubborn $94,500 resistance level — a barrier that held since early December — has noticeably lifted confidence. The popular crypto fear and greed index reflected this mood shift, jumping 11 points to reach 52, signaling neutral to slightly optimistic sentiment.
Ethereum stole some of the spotlight by outperforming Bitcoin. The second-largest cryptocurrency gained about 6.7%, while other large-cap assets including XRP, BNB, and Solana also moved higher with gains generally in the 4–5% range. Well-known tokens such as Dogecoin, Cardano, and Ethena joined the rally too, and most of the top 100 cryptocurrencies were trading in the green.
Macroeconomic data added fuel to the move. U.S. CPI numbers released Tuesday showed inflation cooling faster than expected at the core level, with headline CPI at 2.7% year-over-year — in line with forecasts — and core CPI down to 2.6%, slightly below expectations. Softer inflation strengthens the case for future Federal Reserve rate cuts. Lower rates typically encourage risk-taking and improve liquidity, which often benefits assets like cryptocurrencies.
Regulation was also in focus. Even though the U.S. Senate delayed voting on the CLARITY Act until the final week of January, investors appear more hopeful than worried. The bill is expected to bring clearer rules to the industry by defining which digital assets are securities and which are commodities. Many market participants view this as a vital step for greater institutional adoption, removing the regulatory uncertainty that has sidelined large investors.
Institutional flows are already showing signs of momentum. Data from SoSoValue indicates that spot Bitcoin ETFs saw net inflows of about $753.7 million — nearly seven times higher than Monday’s levels. Ethereum ETFs attracted close to $130 million in inflows, and products tied to assets like Solana and XRP also reported positive flows. If these inflows keep strengthening, the current rally could gain even more steam and potentially push crypto prices toward fresh highs.
Overall, today’s move reflects a powerful combination of macro optimism, regulatory clarity hopes, and a classic short squeeze — all coming together to give the crypto market a strong start to the week.
Also Read: Is Bitcoin Entering a ‘Supercycle’? Fidelity Weighs In
