Bitcoin (BTC) rose to $126,223 on Monday, marking another record as the U.S. shutdown, softer dollar, and surging ETF inflows converged to tighten supply and extend the rally.

Bitcoin (BTC) rose to $126,223 on Monday, marking another record as the U.S. shutdown, softer dollar, and surging ETF inflows converged to tighten supply and extend the rally.

As of writing, the cryptocurrency traded near $124,000, building on a 15% weekly gain that has pulled majors higher across the board.

As of writing, the cryptocurrency traded near $124,000, building on a 15% weekly gain that has pulled majors higher across the board.

Elsewhere, bitcoin has broken records in euro and Swiss franc terms, crossing EUR 106,000 and CHF 99,600, as well in Japan. The Asian nation's new prime minister is signaling a return to Abenomics-style easing, which plays directly into the market’s narrative of easier liquidity conditions ahead, as CoinDesk’s Omkar Godbole noted on Monday.

Elsewhere, bitcoin has broken records in euro and Swiss franc terms, crossing EUR 106,000 and CHF 99,600, as well in Japan. The Asian nation's new prime minister is signaling a return to Abenomics-style easing, which plays directly into the market’s narrative of easier liquidity conditions ahead, as CoinDesk’s Omkar Godbole noted on Monday.

The broader market picked up a bid, following bitcoin's lead. Ether surged 4% to $4,700, its highest in three weeks, with traders eyeing the $4,800–$5,000 range if momentum holds.

The broader market picked up a bid, following bitcoin's lead. Ether surged 4% to $4,700, its highest in three weeks, with traders eyeing the $4,800–$5,000 range if momentum holds.

BNB continues to be the outlier, up more than 20% in the past week and setting fresh records above $1,240, a move that highlights rotation into ecosystem names when the base asset has a bid. Dogecoin gained 6% to $0.26, XRP ticked higher to nearly $3, and Solana has added over 12% in the past seven days.

BNB continues to be the outlier, up more than 20% in the past week and setting fresh records above $1,240, a move that highlights rotation into ecosystem names when the base asset has a bid. Dogecoin gained 6% to $0.26, XRP ticked higher to nearly $3, and Solana has added over 12% in the past seven days.

The breadth of this rally is noteworthy. The total crypto market capitalization rose to $4.27 trillion before easing slightly to $4.24 trillion. The sentiment index stands at 71 (greed), close to levels last seen in August but still short of euphoria. That leaves room for extension without the signs of a blow-off top.

The breadth of this rally is noteworthy. The total crypto market capitalization rose to $4.27 trillion before easing slightly to $4.24 trillion. The sentiment index stands at 71 (greed), close to levels last seen in August but still short of euphoria. That leaves room for extension without the signs of a blow-off top.

ETF-led rally

ETF-led rally

BTC's move to record highs wasn’t a leverage-led spike. Weekly spot ETF inflows crossed $3.2 billion, the highest since November 2024 and second-largest on record, pushing total allocations since January to more than $60 billion, according to data source SoSoValue.

BTC's move to record highs wasn’t a leverage-led spike. Weekly spot ETF inflows crossed $3.2 billion, the highest since November 2024 and second-largest on record, pushing total allocations since January to more than $60 billion, according to data source SoSoValue.

This ETF-driven demand is echoed by some analysts.

This ETF-driven demand is echoed by some analysts.

“Bitcoin’s climb above $124,000, fueled by $3.2 billion in spot ETF inflows, underscores deepening institutional conviction and a maturing market narrative,” said Ryan Lee, chief analyst at Bitget, in a note to CoinDesk.

“Bitcoin’s climb above $124,000, fueled by $3.2 billion in spot ETF inflows, underscores deepening institutional conviction and a maturing market narrative,” said Ryan Lee, chief analyst at Bitget, in a note to CoinDesk.

Meanwhile, FxPro’s Alex Kuptsikevich warned that long-term holders have been active sellers around these levels since July, meaning supply is waiting if demand falters.

Meanwhile, FxPro’s Alex Kuptsikevich warned that long-term holders have been active sellers around these levels since July, meaning supply is waiting if demand falters.

BTC's exchange balances have fallen to a six-year low of 2.83 million BTC, with 170,000 withdrawn in the past month, signaling coins moving off exchanges and into longer-term storage. It’s that combination of steady ETF buying and shrinking supply that seemingly underpins this move.

BTC's exchange balances have fallen to a six-year low of 2.83 million BTC, with 170,000 withdrawn in the past month, signaling coins moving off exchanges and into longer-term storage. It’s that combination of steady ETF buying and shrinking supply that seemingly underpins this move.

Lingering political uncertainty

Lingering political uncertainty

The U.S. government shutdown is entering its second week, stalling key economic releases and creating uncertainty about fiscal direction as investors seek clarity on growth.

The U.S. government shutdown is entering its second week, stalling key economic releases and creating uncertainty about fiscal direction as investors seek clarity on growth.

Similar shutdowns have historically nudged capital toward hard assets, such as gold and bitcoin, reflecting concerns about political stability and its impact on fiat or equity markets.

Similar shutdowns have historically nudged capital toward hard assets, such as gold and bitcoin, reflecting concerns about political stability and its impact on fiat or equity markets.

In 2013, BTC nearly doubled through October as Washington gridlock persisted, while gold added more than 3% during the same period. The 2018–19 closure was different — bitcoin slipped about 10% over five weeks while gold barely moved. The latest record high suggests that the market is following the 2013 pattern.

In 2013, BTC nearly doubled through October as Washington gridlock persisted, while gold added more than 3% during the same period. The 2018–19 closure was different — bitcoin slipped about 10% over five weeks while gold barely moved. The latest record high suggests that the market is following the 2013 pattern.

At the same time, the dollar has softened, removing a headwind for dollar-denominated assets, and bond markets are starting to price a more cautious Federal Reserve.

At the same time, the dollar has softened, removing a headwind for dollar-denominated assets, and bond markets are starting to price a more cautious Federal Reserve.

Traders increasingly expect that a combination of weaker data prints and fiscal paralysis will prompt policymakers to tread carefully on rates or at least avoid further tightening.

Traders increasingly expect that a combination of weaker data prints and fiscal paralysis will prompt policymakers to tread carefully on rates or at least avoid further tightening.

For bitcoin, that reads as easier liquidity conditions ahead, with the kind of dovish bias that has historically accompanied major upside runs in the overall market.

For bitcoin, that reads as easier liquidity conditions ahead, with the kind of dovish bias that has historically accompanied major upside runs in the overall market.

As a neutral observer, $125,000 looks to be a magnet and now a battle line.

As a neutral observer, $125,000 looks to be a magnet and now a battle line.