Leading digital assets saw notable price gains on Tuesday in response to regulatory developments in the U.S. Senate. Bitcoin (BTC) surged past the $96,000 mark for the first time in nearly two months, signaling renewed momentum in the cryptocurrency sector. This price jump coincided with a substantial 45% increase in Bitcoin's trading volume over the previous 24 hours, underscoring intensified market participation.
Ethereum (ETH), the second largest cryptocurrency by market capitalization, bounced to a two-month peak of $3,350, reflecting the broader bullish trend. Additional prominent cryptocurrencies including XRP and Dogecoin also posted strong rallies, with Dogecoin achieving an 8.25% increase to $0.1482.
The crypto market's upswing follows the Senate Banking Committee's disclosure of a draft bill designed to establish clearer regulatory parameters for the cryptocurrency market structure. This bill notably defines altcoins as equivalent in legal treatment to Bitcoin and Ethereum, aiming to bring a standardized framework for digital assets. The committee is scheduled to review and potentially amend the bill in a markup session slated for Thursday.
Investor confidence gained further validation as shares of companies connected to digital assets appreciated. Strategy Incorporated (MSTR) and Coinbase Global (COIN), major players in the cryptocurrency investment and exchange space respectively, ended the day with gains of 6.63% and 4%.
Despite these surging prices, the cryptocurrency market witnessed significant liquidation activity totaling nearly $680 million within the past day, according to Coinglass, with more than $592 million of bearish short positions eliminated. This dynamic indicates a robust unwinding of negative bets on digital currencies amid the positive price movement.
Market data revealed a 6.65% rise in Bitcoin open interest, representing the notional value of outstanding derivatives contracts. Impressively, over half the derivatives traders now hold long positions on Bitcoin, reflecting prevailing optimism about the asset’s near-term trajectory. Simultaneously, the Crypto Fear & Greed Index transitioned from "Fear" to "Neutral," highlighting a tentative shift in market sentiment.
Other cryptocurrencies with market capitalizations exceeding $100 million reported remarkable 24-hour gains. Pirate Chain (ARRR) increased 23.75% to $3.04, Dash (DASH) surged 45.06% to $58.48, and Story (IP) climbed 27.10% to $3.85. Notably, the overall global cryptocurrency market capitalization expanded by 4.67%, reaching $3.25 trillion.
In contrast to gains in digital assets, traditional stock markets experienced a pullback from recent record highs. The Dow Jones Industrial Average declined by 398.21 points, or 0.8%, settling at 49,191.99. Similarly, the S&P 500 and Nasdaq Composite slipped by 0.19% and 0.1% respectively, closing at 6,963.74 and 23,709.8.
Macroeconomic metrics showed stability with the December Consumer Price Index increasing 2.7% year over year, consistent with analyst predictions. On a month-over-month basis, consumer prices rose 0.3%, aligning with expectations.
Energy markets strengthened, as the U.S. West Texas Intermediate oil price climbed beyond $61 per barrel amid escalating geopolitical tensions following statements from President Donald Trump promising assistance to Iranian protesters.
Notably, defense sector stocks faced declines despite anticipated military budget increases. Lockheed Martin Corporation (LMT) dropped 4.34% to $559.34, and Kratos Defense & Security Solutions, Inc. (KTOS) fell 13.78% to $120.15 after President Trump advocated raising the 2027 military budget from $1 trillion to $1.5 trillion.
Industry analysts expressed confidence about ongoing bullish momentum in cryptocurrencies. Michaël van de Poppe, a respected crypto analyst and trader, highlighted Bitcoin’s breakout above its critical 21-day moving average and observed the level now serving as support. He projected, "It’s quite clear that this is going to run to $100,000 in the coming week and that dips are for buying," indicating expectations of further upward trends and the onset of a new bull market.
Another popular commentator, Ali Martinez, suggested that $105,921 could become a relevant price target if Bitcoin surpasses $94,555. At the time of reporting, Bitcoin had already breached this threshold, with market participants watching closely to observe if the higher price point materializes.
Meanwhile, Grayscale's Bitcoin Mini Trust (BTC) shares were trading at $42.11, reflecting a 0.69% increase, amid heightened market activity and investor interest.
Overall, the cryptocurrency market exhibits strengthening fundamentals and investor sentiment, anchored by legislative progress and active trading dynamics, even as traditional equities face short-term declines.