Bitcoin Surges Past $105K as Fed Pauses Hikes, Eyes PCE Report

Bitcoin surged past the $105,000 mark on Thursday, as investors digested the Federal Reserve's decision to pause interest rate hikes and expressed optimism about potential crypto banking regulations. The world's largest cryptocurrency gained 3.1% over the past day, trading at $105,366 at press time.

The Fed's decision to keep interest rates unchanged at 4.25% to 4.50% was in line with analysts' expectations, attributing the move to "somewhat elevated inflation." Despite the dovish stance, Bitcoin's price rose, indicating that investors are waiting for confirmation that rate cuts are on the horizon. Market participants are now shifting their focus to the upcoming Personal Consumption Expenditures (PCE) report, set to be revealed this Friday, which is anticipated to be the next significant catalyst for risk assets, including Bitcoin.

Bitcoin ETF inflows remained sluggish following the Fed's decision, with the 12 spot Bitcoin ETFs recording $92.09 million in inflows on Jan. 29. The majority of inflows came from Grayscale's mini Bitcoin Trust, which drew in $106.23 million, followed by Fidelity's FBTC with $18.2 million in inflows. Meanwhile, BlackRock's IBIT experienced $92.09 million in outflows, ending its 9-day inflow streak. The total trading volume for investment products stood at $3 billion on Jan. 29, while their total net assets amounted to $121.36 billion, accounting for 5.88% of the total Bitcoin supply.

In other news, El Salvador made a significant change to its Bitcoin laws to meet the requirements of a $1.4 billion loan deal with the International Monetary Fund (IMF). The country's Congress swiftly approved a bill that modifies the country's Bitcoin regulations, removing the requirement for businesses to accept Bitcoin as payment. Now, businesses can choose whether or not to accept Bitcoin. Despite this change, El Salvador has not lost its faith in Bitcoin and recently bought 12 more Bitcoins, adding to its national reserves. The country currently holds 6,044 Bitcoins, worth about $617 million, and has made a 133% profit on its investment.