On May 22, Bitcoin made headlines by piercing the $111,000 milestone for the first time in history, reaching an intraday high of $111,867 on Binance. This remarkable surge propelled the cryptocurrency’s market capitalization to approximately $2.22 trillion, accounting for two-thirds of the entire crypto market. The recent rally is attributed to a convergence of powerful catalysts, including institutional inflows, corporate balance-sheet acquisitions, and mounting macroeconomic challenges.
#1 Spot Bitcoin ETF Inflows
US spot Bitcoin ETFs have emerged as a significant source of fresh capital, attracting a steady influx of investment. On May 21 alone, net subscriptions reached $607.1 million, with a staggering $530.6 million directed towards BlackRock’s iShares Bitcoin Trust (IBIT). This brought the 11-day total to over $2.7 billion, pushing cumulative net inflows across the ETF landscape past $42 billion, an extraordinary achievement for such a nascent asset class.
“Over $500 million into iShares Bitcoin ETF… Nearly $2 billion just over the past week. Inflows have been recorded for 26 of the last 27 days, with more than *$7 billion* in new funds overall,” announced Nate Geraci, president of ETF Store, via X. Bloomberg’s Eric Balchunas noted that IBIT is enjoying its “second biggest volume day ever today,” indicating a classic market frenzy driven by the new all-time highs.
#2 Bitcoin Treasury Companies
Alongside the boom in ETFs, an increasing number of publicly listed companies are adding Bitcoin to their treasury reserves. Notable entities such as Strategy and Metaplanet have recently purchased billions of dollars’ worth of Bitcoin. Cantor Fitzgerald’s $3.6 billion SPAC deal is set to take Twenty One Capital public, with over 42,000 BTC on its books. Similarly, Strive Asset Management is merging with Asset Entities on Nasdaq to create what it dubs the first publicly traded asset-manager-led Bitcoin treasury company, backed with a robust $1 billion shelf to continue acquiring Bitcoin.
Additionally, companies such as KULR Technology Group, which increased its holdings to 800 BTC after a $9 million investment, and various international firms from India, Indonesia, Brazil, and France have announced their own Bitcoin accumulation strategies. Collectively, these organizations represent billions in spot, largely price-insensitive demand for the cryptocurrency.
#3 The New Narrative: A Brewing Macro Storm
The macroeconomic environment is amplifying the demand for Bitcoin. Recently, Japanese super-long government bonds, once symbols of stability, have been bid-less, causing the 30-year JGB yield to rise to a record 3.14%. This situation has implications for both Tokyo and Washington, as Japanese institutions have held significant amounts of US Treasuries. Analysts caution that chaotic liquidations of JGB could lead to forced sales of US debt at a time when the Treasury needs to refinance roughly $8 trillion.
With the WSJ Dollar Index down by more than 10% since January and CFTC data revealing the largest speculative short position since mid-2023, investors are actively seeking alternatives to sovereign bonds. Macro expert Raoul Pal commented, “Bond yields are rising. Normally that’s not favorable, yet inflation is consistently declining. The narrative is one of liquidity. A lack of liquidity in the bond market can prompt the government’s traditional response: printing more money.”
Global liquidity trends further support the bullish case for Bitcoin. As global M2, encompassing the money supply in the US, euro area, China, and Japan, began to climb by 3-4% year-to-date, its correlation with Bitcoin price movements has historically lagged by about three months. The current rally appears to follow this pattern. Crypto analyst Kevin (@Kev_Capital_TA) aptly noted, “As the dollar weakens and global liquidity rises, Bitcoin’s value tends to increase.”
Many seasoned market participants interpret the current price dynamics as indicative of a broader behavioral shift. “We are witnessing Bitcoin evolve from a risk-on asset to a risk-off asset,” observed Tushar Jain, co-founder of Multicoin Capital, after observing a sell-off in US treasuries and the dollar. “The market’s reaction to government budget constraints has led to a sell-off in US treasuries and equities while bolstering Bitcoin’s appeal. While this transformation is still unfolding, it may take several more days like today to convince the market that Bitcoin is indeed a risk-off asset. Such changes typically occur gradually before suddenly becoming apparent.”
As a result of these dynamics, Bitcoin remains a focal point of investor attention in an ever-evolving economic landscape.
