Why is crypto going up? 4 key reasons behind the rally

Crypto prices bounced back on Thursday as the mood in the financial market shifted from extreme fear to euphoria within hours.

Bitcoin btc5.04%Bitcoin price was up 5% over the past 24 hours, trading above $81,000, while Solana sol5.95%Solana rose to $115. Some of the top-performing altcoins were Fartcoin fartcoin26.06%Fartcoin, Flare flr27.46%Flare, Bittensor tao18.24%Bittensor, and Hedera Hashgraph hbar14.23%Hedera, which soared by over 15%.

Crypto prices rose for four main reasons. First, the primary catalyst was Donald Trump’s decision to pause his ‘reciprocal’ tariffs on over 70 countries, easing worries that the U.S. was heading toward a major recession, given that it is one of the largest importers globally.

Pausing these tariffs led to a strong surge even in the equities market, with the Dow Jones and Nasdaq 100 rising by 2,932 and 1,900 points, respectively. However, these gains were capped after Trump raised China tariffs to 125%.

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Crypto prices rose as US inflation dropped

Bitcoin and other altcoin prices also rose after the encouraging consumer inflation data. The headline inflation dropped from 2.8% to 2.4%, while the core figure fell from 3.1% to 2.8%. 

These numbers suggest that U.S. inflation is moving in the right direction as it approaches the Federal Reserve’s target of 2.0%. As a result, with the economy slowing and consumer confidence falling, there is a growing chance that the Fed will deliver more cuts than expected. Crypto prices typically perform well when the Fed cuts rates, driving more investors toward riskier assets.

Third, prices climbed after Donald Trump hinted that Republicans were working together to pass his “Big, Beautiful Bill,” his flagship tax proposal. The bill would slash individual and corporate taxes at a projected cost of $4.5 trillion over a decade. For example, it would eliminate taxes on tips and overtime pay. Some of these savings could flow into the crypto industry.

Finally, crypto prices gained momentum after the U.S. Senate voted to confirm Paul Atkins as the next head of the Securities and Exchange Commission. Atkins is expected to be more favorable to the crypto industry than Gary Gensler, who prioritized litigation. The SEC has already ended lawsuits against top crypto companies like Ripple Labs, Uniswap, and Coinbase.