Why does Bitcoin pump?

Preface

Bitcoin once again becomes the focus of global attention, with the recent price breaking through the $100,000 mark. According to data, the daily rise is about 7.6%, and the weekly rise is about 12%. Behind this astonishing rise reflects the joint driving forces of global economic turbulence, institutional investment influx, and optimistic market sentiment.

Global economic situation and market optimism

Recently, news of the US-China trade negotiations has emerged, easing market concerns about the tense economic situation. The US Treasury Secretary is expected to conduct trade negotiations with China in Switzerland, and it is widely believed that this may ease the trade frictions since the Trump era. This news has not only stimulated global market risk appetite but also highlighted the value of Bitcoin as a safe-haven asset once again. Furthermore, the Federal Reserve (Fed) decided to maintain the interest rate between 4.25% and 4.5% at its meeting on May 7, emphasizing that the US economy remains robust. Despite market expectations of pressure from Trump to cut interest rates, the Fed chose a stable policy, further boosting market confidence in Bitcoin.

Institutional investment influx and ETF fund flow

The influx of institutional investment is undoubtedly an important driver of Bitcoin’s rise this time. According to market reports, Bitcoin exchange-traded funds (ETFs) saw a single-day inflow of over $142 million on May 7th, reflecting the growing demand from institutions for Bitcoin as an asset allocation. Since their launch in 2024, these ETFs have accumulated inflows of over $35 billion, becoming a significant option for global asset allocation. Large investment institutions such as the Abu Dhabi sovereign wealth fund and the Swiss National Bank have also increased their holdings in Bitcoin, indicating that global capital is accelerating into the cryptocurrency market.

(Bitcoin ETF inflows, Source: Farside.co.uk)

The rise of Bitcoin as a safe-haven asset

In addition to the drive of institutional capital, the rise of Bitcoin is also strengthened by its safe-haven asset properties. With the easing of the US-China trade negotiations and the increasing uncertainty of domestic assets in the United States, many investors are starting to seek asset allocations beyond the US dollar, with Bitcoin becoming one of their top choices. In the past, Bitcoin was often seen as a mirror performance of tech stocks, but now it is gradually decoupling, showing independent trends from traditional markets.

Future Outlook

With the uncertainty of the global economy, the continuous influx of institutional capital, and the further development of US-China trade relations, Bitcoin is expected to continue to maintain its strength. If the Federal Reserve adjusts its policies in the future and loosens monetary policy, the price of Bitcoin may further soar. In the situation where global funds seek safe havens and digital asset allocation, Bitcoin may no longer just be the leader of the cryptocurrency market, but also become an important part of global asset allocation.

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Summary

The recent surge in the price of Bitcoin reflects the combined driving forces of global economic turbulence, institutional investment influx, and market optimism. With the continued uncertainty in the global economy, further influx of institutional capital, and the development of US-China trade relations, Bitcoin is expected to maintain its strength. If the Federal Reserve adjusts its monetary policy in the future, the price of Bitcoin may further rise. Against the backdrop of global funds seeking refuge and digital asset allocation, Bitcoin will not only continue to lead the crypto market, but also has the potential to become a significant component of global asset allocation.