5 min readBitcoin broke above its 105k resistance on Sunday and has inched higher over the start of the week, reaching a peak of 108k in early trade on Wednesday. BTC has risen over 3% so far this week, and 12% so far this month, adding to 14% gains in April.
Bitcoin has risen to within 1% of its 109.5k record high, as investors look for protection from global uncertainty. Over the past six weeks, Bitcoin has jumped almost 40% and has remained above the key 100K psychological level for the past 11 days.
This move has been propelled by a mix of macroeconomic and geopolitical factors that have rattled confidence in traditional financial systems. At the same time, the de-escalating trade tensions between the US and China have helped boost risk-on sentiment.
Concerns over the US deficit grow
One of the principal drivers of recent gains has been Moody’s cut to the US credit rating owing to rising concerns surrounding the $36 trillion US debt pile. President Trump is also urging Republicans to support his sweeping tax cut bill, which some economists say could add a further $3 to $5 trillion to the US deficit.
As a result, confidence in government bonds is declining. Bonds have traditionally acted as shock absorbers during risk-off moments in the market. This is no longer necessarily the case. The 30-year US treasury yield surged above 5% when Moody’s cut the US sovereign rating, and the Japanese 30-year yield rose to 3.15% on Tuesday, a record high. Yields rise when bonds fall.
With investors questioning the role of bonds within their portfolios, Bitcoin and Gold could benefit as an alternative hedge against the uncertainty.
Regulatory developments support BTC
Separately, BTC and the broader cryptocurrency market benefit from encouraging regulatory developments after the Senate advanced the Genesis Act, a significant stablecoin regulation bill. The bill’s progression on Tuesday has been seen as a major victory for the crypto industry and signals a more supportive regulatory environment. The bill is expected to be voted on the Senate floor later this week, which could pave the way for a signature from President Trump.
Favourable regulatory developments could help increase adoption, and if current trends continue, they could help the cryptocurrency reach new highs.
BTC ETFs post a fifth day of gains
Against this backdrop, spot BTC ETFs have recorded substantial gains. BTC ETFs recorded a fifth straight day of positive inflows on May 20th. BTC ETFs are on track for a sixth straight week of net inflows. The last time that BTC ETFs recorded this level of inflows was when the BTC price reached its record high at the start of the year.
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