Bitcoin Soars to a Record $111,867—Here’s the Reason Behind It

On May 22, Bitcoin surged past the $111,000 mark for the first time ever, reaching an intraday peak of $111,867 on Binance, which translated to a market valuation around $2.22 trillion, accounting for about two-thirds of the overall cryptocurrency market. This latest surge is driven by a unique mix of factors, including institutional investments, corporate acquisitions, and increasing macroeconomic pressures.

#1 Bitcoin ETF Capital Inflows

US spot Bitcoin ETFs have emerged as a significant avenue for new investments, attracting fresh capital from various sectors. As reported, Farside Investors noted $607.1 million in net subscriptions on May 21, with a remarkable $530.6 million directed towards BlackRock’s iShares Bitcoin Trust (IBIT). This influx pushed the total over 11 days to more than $2.7 billion, raising cumulative net inflows across the sector to over $42 billion—a record pace for a new asset class.

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“More than $500 million into iShares Bitcoin ETF… Nearly $2 billion just over the last week. Inflows have occurred on 26 of the last 27 days, totaling *$7+ billion* overall. With today’s trading volume, we anticipate these inflow figures to rise,” stated ETF Store president Nate Geraci on X. Bloomberg’s Eric Balchunas noted that IBIT is having “its second-largest volume day ever. A classic frenzy is underway, leading to new all-time highs. The last time such trading occurred was on January 23 (the previous ATH). All BTC ETFs are seeing heightened activity, with many expected to experience double their usual flow.”

#2 Corporations Holding Bitcoin as Treasury

Alongside the ETF surge, a growing number of publicly traded firms are adopting Bitcoin as a main treasury asset. In addition to Strategy and Metaplanet, these companies have collectively acquired billions in Bitcoin recently. Cantor Fitzgerald’s $3.6 billion SPAC merger will bring Twenty One Capital public, which will hold over 42,000 BTC and is supported by Tether, Bitfinex, and SoftBank. Moreover, Strive Asset Management is merging with Asset Entities on Nasdaq to establish what it describes as the first publicly traded asset manager with a Bitcoin treasury, featuring a live $1 billion shelf for ongoing purchases.

Battery technology firm KULR Technology Group increased its holdings to 800 BTC after a recent $9 million acquisition. Similarly, India’s Jetking Infotrain, Indonesia’s DigiAsia Corp, Brazil’s fintech Méliuz, France’s Bpifrance state lender, and David Bailey’s Nakamoto Holdings, which is merging with KindlyMD to form “the first decentralized Bitcoin treasury network,” among others, have all announced their accumulation strategies within the previous month. Collectively, these firms represent billions in spot demand, largely unaffected by price fluctuations.

#3 Emerging Narrative: A Gathering Macro Storm

The broader economic environment is further intensifying this trend. Japanese super-long government bonds, once known for their minimal yields, have seen significant sell-offs, with the 30-year JGB yield rising to a historic 3.14%. This movement tightens the relationship between Tokyo and Washington, as Japanese investors are among the largest foreign owners of US Treasuries, and analysts caution that chaotic JGB liquidations could trigger sales of US debt at a time when the Treasury is set to refinance roughly $8 trillion this year.

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With the WSJ Dollar Index declining over 10% since its peak in January and CFTC data revealing the largest speculative short position since mid-2023, investors are searching for alternatives to government bonds. Macro expert Raoul Pal remarked: “Bond yields are climbing. Generally, this is not favorable… Yet inflation continues to decrease. The key issue is liquidity. There’s a scarcity of liquidity in the bond market, and when yields rise too high, the government typically responds by increasing money supply.”

Global liquidity patterns further support this argument. Global M2, which encompasses the money supply in the US, euro-area, China, and Japan, hit its lowest point late last year but has since increased by 3-4% year-to-date, per various trackers. Price movements in Bitcoin usually trail global M2 shifts by about three months; this latest rally seems to align with that timeline. As crypto analyst Kevin (@Kev_Capital_TA) noted on X, “As the dollar weakens and global liquidity increases, Bitcoin prices rise.”

For seasoned market analysts, recent price movements indicate a notable change in market sentiment. “We are witnessing Bitcoin evolving from a risk-on asset to a risk-off asset,” commented Tushar Jain, co-founder of Multicoin Capital, following a bond market downturn and dollar depreciation.

“Today, it became evident that the government cannot reduce the budget deficit. The market’s reaction was to sell US Treasuries, the dollar, and equities, while opting to buy Bitcoin. The transition is still ongoing. More days of this nature are necessary to convince the market that Bitcoin is indeed a risk-off asset. Much like significant transformations, this will unfold gradually before accelerating suddenly,” Jain added.

As of now, BTC is trading at $

Featured image created using DALL.E, chart from TradingView.com