Bitcoin has surged to a new all-time high, reaching $123,231 on Wednesday. This surge is fueled by traders anticipating liquidations that could propel BTC above $125,000. The increase happened after the S\&P 500 also rallied to a record high of 6,457.

This milestone follows the release of the July US CPI, which showed inflation holding steady at 2.7% year-over-year, unchanged from June and below the anticipated 2.8%. The data indicated a 0.2% increase in overall CPI, compared to the 0.3% rise in June. The CME FedWatch tool then indicated increased market odds of a Federal Reserve interest rate cut in September, rising to 93.9%.

Many crypto investors believe that historically, Bitcoin's price benefits from Federal Reserve rate cuts and a move away from quantitative tightening. There is also anticipation that President Trump's economic agenda, outlined in the One Big Beautiful Bill, will lead to increased spending, inflation, and risk-seeking behavior in financial markets.

Inflows into Bitcoin and Ether spot ETFs have also contributed to the bullish sentiment. On Tuesday, Bitcoin ETF netflows reached $65.9 million, while Ether ETFs saw $523.9 million in share purchases. The ETH ETF experienced its first $1 billion inflow on Tuesday, and Bitcoin ETFs have seen $1.02 billion in inflows since August 8.

Liquidation heatmap data from Hyblock reveals that Bitcoin pushed through a short liquidation cluster starting at $122,500, with potential for further forced position closures extending to $124,000. CoinGlass data suggests that nearly $2 billion in short positions are at risk of liquidation if BTC price surpasses the $122,800 to $125,500 liquidity cluster.

Ethereum's rise is also noteworthy, as it crossed the $4,500 mark. This surge in ETH, along with BTC's performance, has boosted overall sentiment in the altcoin market. Google Trends data indicates that search volume for "altcoin" has hit a five-year high, suggesting renewed retail interest.

Technical analysis shows Bitcoin encountering resistance zones, with Hyblock liquidation heatmaps indicating a significant short-squeeze cluster between $122,800 and $125,500. Ethereum's breakout past $4,500 has sparked bullish sentiment, with traders targeting $5,000 as the next milestone.

However, the crypto market remains volatile, and while the current outlook is optimistic, unforeseen events could impact price predictions.