In a remarkable display of resilience, Bitcoin has surged to a record high of $87,600 during Monday’s Asian trading hours, marking its highest point since early April. This surge is part of a broader trend where investors are increasingly turning to hard assets amid growing inflation concerns.
Global Liquidity and the Bitcoin Surge
According to Vincent Liu, Chief Investment Officer at Kronos Research, the primary driver behind this uptick is “rising global liquidity, fueled by an expanding M2 money supply and a weakening U.S. dollar.” M2 money, which includes savings accounts and money market funds, has seen a significant increase, influencing investor behavior.
Bitcoin’s price rose by approximately 3.6% over the past day, with trade volumes soaring to at least $24.5 billion, outstripping other non-stablecoin cryptocurrencies during the afternoon trading session in Asia.
Liu further noted that financial conditions have loosened, allowing capital to “rotate into hard assets such as Bitcoin and gold.” This shift is evident as gold also reached a historic milestone, breaking above $3,400 per ounce during the same trading period, culminating in a 29% year-to-date gain.
Market Dynamics and Investor Sentiment
The recent financial landscape has been tumultuous, with President Donald Trump’s introduction of so-called Liberation Day tariffs leading to a sharp decline in overall asset prices. Ryan Yoon, lead research analyst at Tiger Research, highlighted that during this period, key market sentiment indicators such as the Fear & Greed Index and S&P 500 RSI(14) formed a bottom, signaling a potential shift.
Yoon explained that investors began looking for rebound opportunities, increasingly shifting funds to Bitcoin, which offers “higher growth than gold.” The relative strength index (RSI), commonly used to track market momentum over 14-day periods, indicated an improving performance for the S&P 500 index during this time.
This investor shift coincided with a significant drop in the U.S. Dollar Index (DXY), which fell to 98.5, its lowest level since February 2022. This decline followed reports of President Trump exploring options to remove Federal Reserve Chairman Jerome Powell. Over the past three months, the DXY has plunged by approximately 10%.
Yoon also noted that on-chain indicators such as NUPL and MVRV-Z showed improving conditions, suggesting an initial market recovery post-Trump’s announcement of a 90-day tariff exemption for non-retaliatory countries.
Institutional Confidence and Market Outlook
Despite the positive trends, institutional confidence is returning slowly, as evidenced by Bitcoin spot ETF flows. Last week, Bitcoin ETFs recorded $12.7 million in net flows, a modest reversal from the previous week’s negative outflows. However, this recovery represents the lowest weekly inflow level for this year.
Analysts from QCP Capital, in their April 21 Asia Color note, emphasized the growing correlation between BTC, gold, and equities. They pointed out that the narrative of BTC as a safe haven or inflation hedge is regaining traction, which could provide a fresh tailwind for institutional BTC allocation.
However, the outlook remains cautiously optimistic. Analysts are waiting for the Federal Reserve’s messaging at the upcoming May 6–7 FOMC meeting. Liu from Kronos Research suggested that a dovish stance by the Fed could sustain inflows, while clear guidance on trade policy could stabilize the broader markets.
As the financial landscape continues to evolve, investors and analysts alike are keenly observing these developments, understanding that the dynamics of crypto markets are intricately linked to global economic indicators and policy decisions.
For more insights into the shifting sands of the cryptocurrency market, explore our detailed analysis on crypto price volatility and stay updated with the latest trends and forecasts.
