Cryptocurrencies are on a rally again, thanks to some encouraging economic data and easing trade tensions, which have given a boost to investors’ confidence. Earlier this week, Bitcoin (BTC) surpassed the $100,000 mark for the first time in nearly five months.

Bitcoin is now on track to surpass its all-time high of $106,533 attained on Dec. 22. Bitcoin had a stellar 2024 and experts had predicted that the cryptocurrency could cross $140,000 once global tensions ease.

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Bitcoin surpassed $104,000 on Thursday night on renewed optimism that easing trade tensions and cooling inflation will save the U.S. economy from slipping into a recession. The Commerce Department said earlier this week that inflation is cooling steadily.

The consumer price index (CPI) rose 0.2% sequentially in April and 2.3% from the year-ago levels, the lowest since February 2021. The monthly reading was in line with expectations, while the 12-month inflation came in below economists’ expectations.

Core CPI, which excludes the volatile food and energy prices, also increased 0.2% month over month in April, lower than the forecast of 0.3%. Year over year, core CPI grew 2.8%, which came in line with analysts’ expectations. Inflation is now on track to meet to Fed’s 2% target.

The broader market has rallied this week as investors breathed a sigh of relief after the United States and China announced a trade truce following talks over the weekend. Both countries decided to temporarily halt tariffs for 90 days and work out a deal.

Investors are expecting more trade deals with other countries to be worked out soon. Easing trade tensions and signs of cooling inflation have alleviated fears of a weakening U.S. economy.

Investors are also hopeful that the easing inflation will give the Federal Reserve the confidence to resume its rate cuts in the near term. This is likely to further help the crypto market as higher interest rates for a longer period can have a negative impact on cryptocurrencies by dampening investor interest in high-risk assets, increasing the cost of holding non-interest-bearing assets like Bitcoin, and strengthening the U.S. dollar, which are often considered a headwind for the crypto market.