Bitcoin pushed past the six-figure mark for the first time in over two months, coming within a hair of $104,000 in early Asian hours Saturday, as crypto markets staged a sharp rebound on improving macro sentiment and Ethereum’s latest network upgrade.

Dogecoin DOGE$0.23021 led the gains among majors with a 10% rally, while ether ETH$2,480.17 rose 3.5% following the successful implementation of its long-awaited Pectra upgrade, bringing weekly gains over 30%.

Other majors, including Solana SOL$171.62, Cardano ADA$0.79306, xrp XRP$2.36, and BNB Chain’s BNB$651.60, rose between 2% and 6%, driven by a shift in investor sentiment from caution to risk-on.

The move follows a string of pro-crypto developments in the U.S. this week. On Wednesday, New Hampshire passed a bill allowing the state to create a strategic Bitcoin reserve. Arizona followed suit a day later with its own legislation supporting a crypto reserve. The state-level momentum comes as political leaders lean further into digital asset policy ahead of the November election in some states.

President Donald Trump’s bullish remarks on upcoming U.S.-China trade talks also helped ease market jitters. The comments coincided with the U.S. and U.K. signing a fresh trade agreement that will remove reciprocal tariffs and lower duties on American goods, further lifting sentiment across equities and crypto alike.

“President Trump’s optimistic outlook on this weekend’s China trade talks is easing fears of an escalating trade war, encouraging traders to shift capital back into asset classes like cryptocurrencies,” said Jeff Mei, COO at BTSE, in a message to CoinDesk. “This could very well drive bitcoin back towards its all-time high and potentially surpass it.”

BTC trades about 5% below its January record high of over $108,700 as of European morning hours on Saturday.

Analysts say the recent moves mark a decisive break from the sluggish price action that plagued altcoins through much of March and April.

“Traders believe the crypto industry may have finally found its second wind as a hedge against market uncertainty,” Nick Ruck, director at LVRG Research, told CoinDesk in a Telegram chat.

“Investors are changing their perspectives on crypto now that altcoins have departed from a negative trend and found buying pressure from a renewed risk-on sentiment,” Ruck added.

Ethereum’s 30% rally this week is also being attributed to growing institutional interest and the momentum behind its Pectra upgrade, which introduces long-anticipated execution layer reforms aimed at boosting efficiency and scalability.

“The upgrade provides reforms Ethereum desperately needs to cement its position as a leading chain amidst growing competition,” BTSE’s Mei said. “Given that Ethereum is trading well below its all-time high, we could see substantial upside in the coming weeks and months, especially as macro fears ease and institutions become more willing to allocate towards crypto and crypto ETFs.”

Still, traders are closely watching this weekend’s U.S.-China trade negotiations. Talks are set to begin later on Saturday in Switzerland, and any signs of stalemate or renewed tension could undercut the current rally.

A soft U.S. inflation report later Wednesday will likely bode well for risk assets, including bitcoin (BTC). But those expecting bullish fireworks may be disappointed.

The Labor Department will publish January’s consumer price index (CPI) report on Wednesday at 13:30 UTC. It’s expected to show that the cost of living increased by 0.3% month-on-month in January, slowing down from December’s 0.4% rise, according to Reuters estimates tracked by FXStreet. The annualized figure is expected to match December’s 2.9% reading.

The core inflation, which strips out the volatile food and energy component, is forecast to have risen to 0.3% month-over-month from 0.2%, resulting in an annualized reading of 3.1%, down from December’s 3.2%.

Lower-than-expected data, particularly the core figure, will likely bolster expectations for further Federal Reserve (Fed) interest rate cuts, which could lead to lower Treasury yields and a weaker dollar index, ultimately boosting demand for riskier assets. According to CME’s FedWatch tool, the market currently estimates a 54% chance that the Fed will either cut interest rates once or not at all this year.

While a potential adjustment in Fed rate cuts could lift BTC, it is unlikely to be the sole catalyst for a breakout from the ongoing consolidation between $90,000 and $110,000.

This is due to forward-looking market metrics indicating higher inflation in the coming months amid trade war fears, suggesting that the Fed may have a limited window to implement aggressive rate cuts.

Data tracked by Mott Capital Management shows that two-year inflation swaps have climbed to nearly 2.8%, the highest since early 2023. The five-year swap is exhibiting a similar trend. Higher inflation swaps indicate that the market is expecting inflation rates to rise in the future, prompting investors to pay a higher premium to protect themselves against potential purchasing power loss by entering into swap contracts tied to CPI.

In other words, the ongoing uptick in these metrics indicate that the progress in inflation toward the Fed’s 2% target has stalled, and price pressures are likely to increase over the coming years, probably due to Trump’s tariffs.

Plus, some investment banks believe a soft January CPI reading won’t see the Fed move away from its hawkish rate guidance. In his testimony to Congress Tuesday, Chairman Jerome Powell said the central bank is in no hurry to cut rates.

“We don’t expect that progress on inflation will be enough to prompt additional interest rate cuts from the Fed this year,” RBC’s weekly note said, adding that January’s report will show limited easing in price pressures.

BlackRock said the persistent services inflation will keep the Fed from cutting rates.

“We get U.S. CPI for January this week. Even as December’s CPI report showed signs of inflation pressures easing, wage growth remains above the level that would allow inflation to recede back to the Federal Reserve’s 2% target, in our view. We see persistent services inflation forcing the Fed to keep rates higher for longer,” BlackRock said.

Lastly, BTC may move closer to the lower end of its $90K-$110K trading range should the CPI print hotter than expected.