Bitcoin extended its rally on Friday, climbing to fresh all-time highs following a surge in investor demand for cryptocurrency exchange-traded funds.

The digital asset rose as much as 4% to $118,396.01, after briefly touching $118,872.85 overnight, according to data from Coin Metrics. Ether, the second-largest cryptocurrency, also rallied, gaining nearly 7% to surpass the $3,000 mark for the first time since February.

Fueling the surge was a spike in ETF inflows. Bitcoin ETFs recorded their biggest day of inflows in 2025 on Thursday, attracting $1.18 billion, while Ether ETFs posted their second-highest single-day inflow ever, drawing $383.1 million, according to crypto analytics firm SoSoValue.

“That’s when we started to really take out the top range,” said Markus Thielen, CEO of 10x Research. “It’s expected that whoever comes in to lead the Fed next is going to be dovish. We also know, that saving the budget deficit has sort of been pushed under the rug,” he added, nodding to the “One Big Beautiful Bill Act,” which is expected to increase the federal deficit – and which can be a positive catalyst for bitcoin.

In the past 24 hours, over $650 million in bitcoin short positions and more than $215 million in ether shorts have been liquidated. These liquidations occur when traders using leverage to bet against the market are forced to buy back assets as prices rise, adding upward pressure and triggering further liquidations.

So far this week, bitcoin is on pace for a nearly 10% gain, while ether has surged more than 20%, reflecting strong bullish momentum across the crypto market.

The renewed investor appetite underscores growing institutional interest in digital assets amid broader optimism about the sector’s regulatory outlook and market performance.