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Bitcoin broke the $111,000 mark for the very first time ever on May 22, reaching an intraday maximum of $111867 at Binance. It now has a capitalization market of $2.22 billion, which is two-thirds the total crypto market. This latest phase of the rally has been propelled by an array of powerful catalysts, which include institutional flows and corporate balance sheets, as well as mounting macroeconomic stress.
Bitcoin ETFs Inflows at #1
US Bitcoin spot ETFs are a conduit for new capital from Wall Street into BlackRock vaults. Farside Investors reported $607.1 million in net subscriptions for 21 May. Of this, $530.6 millions went into BlackRock’s vaults. BlackRock‘s iShares Bitcoin Trust. That pushed the 11-day haul to more than $2.7 billion and lifted cumulative net inflows across the complex past $42 billion—an unprecedented pace for a six-month-old asset class.
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“Over $500mil into iShares Bitcoin ETF…Nearly $2 bil just over past week or so. Inflows 26 of past 27 days. *$7+bil* in new $$$ overall. Given trading volume today, expect these inflow numbers to increase,” Nate Geraci, president of ETF Store posted Eric Balchunas, Bloomberg’s Eric Balchunas, added that IBIT has posted a positive return on investment. “its 2nd biggest volume day ever today. Classic feeding frenzy in effect, new ATHs will do that, e.g. last time traded this much was 1/23 (last ATH). All the btc ETFs are elevated, most gonna see 2x their average. Flows incoming.”
Bitcoin Treasury Companies
Parallel to ETFs, another group of companies listed on the stock exchange is using Bitcoin as its primary financial asset. These companies, including Metaplanet and Strategy, have bought Bitcoin worth billions in the last few weeks. Cantor FitzgeraldTwenty One Capital’s $42 million SPAC will bring it public, with 42,000 BTC, supported by Bitfinex, Tether and SoftBank. Strive Asset Management and Asset Entities are merging on Nasdaq, creating what they call the world’s first Bitcoin-treasury-led asset-manager company. It has an active $1 billion shelf for buying bitcoin.
Battery tech firm KULR Tech Group increased its BTC stack this week to 800 BTC after a $9 million new purchase. Elsewhere, India’s Jetking Infotrain, Indonesia’s DigiAsia Corp, Brazil’s fintech Méliuz, France’s state lender Bpifrance and David Bailey’s Nakamoto Holdings, now merging with KindlyMD to build “the first decentralised Bitcoin treasury network,” All of these companies have unveiled their accumulation strategies over the past few weeks. These firms collectively represent billions in demand for spot products, which is largely unaffected by price.
# 3 The New Narrative – A Coming Macro Storm
Fuel is being added to the fire by macro-economic factors. Japanese super-long government bonds—once synonymous with near-zero yields—have gone bid-less, sending the 30-year JGB yield to a record 3.14 %. This move has caused the 30-year JGB yield to reach a record 3.14 %. tightens the feedback loop Analysts warn of a possible link between Tokyo and Washington. Japanese institutions are among the biggest foreign holders of US Treasuries. They could be forced to sell US debt if JGB liquidations go awry, just when the Treasury is refinancing around $8 trillion in this year.
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Investors are looking for alternative to sovereign papers as the WSJ Dollar Index is down over 10% since its peak in January and CFTC statistics show the largest speculative position on short sale since mid-2023. Macro guru Raoul Pal said: “Bond yields are going up. Normally that’s not a good thing… But inflation is falling all the time. The story is liquidity. There’s a lack of liquidity in the bond market, and when yields get too high the government’s reaction function is always and in every case to print more money.”
The global liquidity dynamics are also important. Global M2—aggregating the money stock in the US, euro-area, China and Japan—bottomed late last year and has risen 3–4 % year-to-date, according to multiple trackers. Bitcoin’s price turns typically follow global-M2 changes by three months. The current rally was almost exactly on time. Kevin Capital TA (@Kev_Capital_TA), a cryptocurrency analyst on X noted. “Dollar goes down, global liquidity rises, BTC goes higher.”
Some market veterans believe that the recent price movement signals a more fundamental shift in behaviour. “We are watching BTC transform from a risk-on asset to a risk-off asset,” Multicoin Capital co-founder Tushar Jain wrote Following Wednesday’s bond and dollar sale.
“Today we saw further proof that the government cannot cut the budget deficit. The market reacted by selling US treasuries, selling USD, selling equities, and buying BTC. The transformation is not yet complete. It will take more days like this to convince the market that BTC is a risk off asset. Like most big changes, this will happen slowly and then suddenly,” Jain added.
BTC was trading at $ during the time of this press release.
Featured Image created using DALL.E and chart from TradingView.com
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Source: www.newsbtc.com
