Bitcoin (BTC) surged to a new record of $126,223 on Monday, fueled by a combination of the U.S. government shutdown, a softer dollar, and surging spot ETF inflows. As of writing, BTC traded near $124,000, extending its weekly gain to roughly 15% and lifting broader crypto markets in the process.

Exchange Balances Hit Six-Year Low
Data shows BTC holdings on exchanges have dropped to a six-year low of 2.83 million coins, with 170,000 withdrawn over the past month. Analysts interpret this as a sign that investors are moving coins off exchanges into longer-term storage, tightening available supply and reinforcing upward pressure on prices.

Global Peaks and Market Momentum
Bitcoin’s rally has also set new records in euro and Swiss franc terms, surpassing EUR 106,000 and CHF 99,600. In Japan, optimism surrounding the new prime minister’s return to Abenomics-style easing has further supported expectations for looser liquidity, according to CoinDesk’s Omkar Godbole.

Altcoins have mirrored BTC’s strength: Ethereum’s ether (ETH) climbed 4% to $4,700, approaching the $4,800–$5,000 range if momentum continues. Binance Coin (BNB) has emerged as a standout performer, rallying more than 20% this past week to surpass $1,240. Dogecoin (DOGE) rose 6% to $0.26, XRP approached $3, and Solana (SOL) gained over 12% in the last seven days. The total crypto market capitalization briefly touched $4.27 trillion before settling at $4.24 trillion, with the sentiment index at 71 (greed), indicating room for further upside.

ETF Inflows Drive Institutional Demand
Unlike leverage-driven spikes, BTC’s surge has been underpinned by institutional demand. Weekly inflows into U.S.-listed spot ETFs reached $3.2 billion, the second-largest weekly total on record and pushing cumulative allocations since January past $60 billion, according to SoSoValue.

“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. However, long-term holders remain active sellers around these levels, suggesting supply could cap further gains if demand falters, noted FxPro’s Alex Kuptsikevich.

Political Uncertainty Adds Fuel
The ongoing U.S. government shutdown, now entering its second week, has delayed key economic data and heightened uncertainty over fiscal policy. Historical patterns show that such shutdowns often drive capital toward hard assets. For instance, BTC nearly doubled in October 2013 amid Washington gridlock, while gold rose more than 3% during the same period. The current rally appears to echo that scenario.

A softer dollar and expectations for a more cautious Federal Reserve have further bolstered crypto. Traders are increasingly betting that weaker economic data and fiscal paralysis could prompt policymakers to hold rates steady, creating favorable liquidity conditions that historically accompany major upside moves.

At present, $125,000 stands out as a key psychological and technical level, forming a focal point for both buyers and sellers as the market navigates this historic rally.