Bitcoin has roared to a record high, briefly touching $124,400 on Thursday before settling at $123,868, in a rally that is shaking up global markets and reigniting the debate over whether institutional adoption is fueling a sustainable boom — or inflating another crypto bubble. Ethereum also surged, trading near $4,717, its highest level since 2021.

Institutional demand and rate cut hopes driving the surge

The cryptocurrency rally comes amid a wave of optimism in the global financial markets. According to Himanshu Maradiya, Founder and Chairman of CIFDAQ, the surge is being powered by strong institutional inflows and expectations of a September interest rate cut in the United States.

“Bitcoin surged past $124,000 for the first time, setting a new all-time high before easing to $123,868,” Maradiya said. “The rally was fueled by strong institutional demand and growing expectations of a September interest rate cut, with CME FedWatch now showing a 93.7% probability.”

US economic data has also played a role. Softer-than-expected consumer price inflation came in at 2.7% year-on-year, boosting hopes of looser monetary policy, though a rise in core inflation to 3.1% may make the US Federal Reserve more cautious.

Ethereum joins the party

Ethereum, the second-largest cryptocurrency by market value, climbed near its previous peak of 2021, trading at $4,717. Analysts note that Ethereum’s rise mirrors Bitcoin’s trajectory, supported by increased institutional participation.

Maradiya highlighted that Bitcoin ETFs have added over $3.6 billion in inflows in just the past month, while corporate and sovereign treasuries now hold an estimated 3.64 million BTC — around 17% of total supply. “The markets may experience consolidation between $120,000 and $125,000, but strong structural demand and limited supply will support further gains through the end of the year,” he added.

Policy shifts boosting sentiment

Edul Patel, Co-founder and CEO of Mudrex, pointed to policy developments as another factor behind the rally. “Moves by the Trump administration to ease investment in crypto assets have further improved market sentiment,” Patel said. “Currently trading at $123,600, the breakout has pushed BTC into price discovery, with liquidation clusters forming near $125,500. If the momentum continues, we could see BTC heading towards $140,000 in the coming weeks.”

Patel also noted that the broader crypto market cap hit a record $4.18 trillion, driven by optimism over a rate cut, corporate accumulation, consistent ETF inflows, and bullish derivatives trading.

Not without risks

Despite the optimism, market watchers caution that the rally is not without risks. While the expectation of a rate cut is widely priced in, any hawkish stance from the Fed could dampen sentiment. Core inflation remains elevated, and global macroeconomic uncertainties could trigger volatility.

Furthermore, some analysts warn that the speed of the rise — more than doubling in less than a year — carries echoes of previous speculative bubbles. With 17% of Bitcoin supply now locked in corporate and sovereign treasuries, the market’s liquidity profile has shifted, potentially amplifying price swings during sell-offs.

Long-term outlook

Institutional adoption continues to underpin Bitcoin’s status as a maturing asset class. Supporters argue that regulatory clarity, corporate accumulation, and growing integration into mainstream finance make this rally fundamentally different from past speculative spikes. Skeptics counter that while structural demand is indeed strong, crypto markets remain vulnerable to regulatory shocks and sentiment-driven corrections.

As Bitcoin hovers just below its peak, the coming weeks will test whether the cryptocurrency can sustain its momentum or whether this latest surge will join the list of short-lived rallies in crypto history. For now, both Wall Street and Main Street are watching closely — some with bullish excitement, others with wary scepticism.