Important takeouts:
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Bitcoin hit a new all-time high of $126,200, backed by a record $5.67 billion inflow of ETP.
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Financial and geopolitical uncertainty has revived the narrative of “collapsing trade.”
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The influx of systems is dominant, but retail participation continues to decline.
Bitcoin (BTC) hit a new all-time high of $126,200 on Monday, following one of the record-highest weeks of digital assets as global crypto exchange trading products (ETPS) recorded a net inflow of $5.67 billion. The surge reflects the return of investors’ convictions supported by new beliefs in “collapsing trade” as increasing financial and geopolitical risks.
As mentioned in Bitwise’s weekly crypto market compass report, current crypto rallies highlight how Fiat’s trust and increasing macroeconomic uncertainty drives the structural demand for valuable assets such as Bitcoin and gold.
Research Superintendent and Head of Research Andre Dragosch, Senior Research Fellow Max Shannon, and research analyst Ayush Tripathi stressed that the US Dollar Index (DXY) fell 10% since the start of the year, gold surged by 50%, surpassing Bitcoin’s 27% profit at the same time. However, many investors now view BTC as a digital hedge offering greater asymmetric benefits in competition with currency collapse.
According to Bitwise, Spot Bitcoin Exchange-Traded Funds (ETFS) led to a $3.49 billion inflow, followed by Ethereum’s $1.49 billion and $685 million in former ethereum Altcoin products. The US Spot ETF dominated the activity, with BlackRock’s iShares Bitcoin Trust (IBIT) and Bitwise’s BITB attracting most of the new allocations.
Meanwhile, on-chain data cited in the report revealed over 49,000 BTC withdrawing from exchanges by whale entities, while positive spot buying and moderate leverage suggests sustainable progress rather than euphoric.
Historically bullish and liquidity in the fourth quarter, the Dragosh and Bitwise team concluded.
“Investors on both sides of the valuable debate could ultimately converge to the same outcome, renewing capital inflows into digital assets.”
Related: Bitcoin traders call $124K “Pivotal” when BTC is boosted from New Time High
Financial vulnerabilities replenish long-term Bitcoin
Bitcoin advocate Paul Tudor’s Jones reflects the growing view that the US financial situation is now a key macro driver for risky assets. With the federal deficit expanding and annual interest costs set to exceed $1 trillion, the market has been increasingly priced for sustained monetary easing, which has historically been a tailwind for BTC.
Cointelegraph reported that when foreign owners retreat from the US treasury and the dollar weakens, capital revolving towards “hard assets” so that Bitcoin can accelerate. It should be noted that although a comparison between Tudor and the Bull Cycle in the late 1990s could lead to increased ratings, the lack of euphoria and ongoing institutional influx suggests there is room for running for assembly.
Essentially, fiscal vulnerability, easing policy expectations, and declining real yields have converged to create a ripe environment for Bitcoin’s structural growth. However, not all on-chain signals fit this story.
Bitcoin researcher Axel Adler Jr. noted that even if Bitcoin prices rise to new highs, small trading activities, typically driven by retailers, have been steadily declining since spring 2024.
This divergence between price rises and declining retail participation suggests that current progress could be disproportionately institutional-driven, suggesting retail fatigue beneath the surface of Bitcoin’s bullish momentum.
Related: US Bitcoin ETF posts the second highest influx since launching on Crypto Rally
This article does not include investment advice or recommendations. All investment and trading movements include risk and readers must do their own research when making decisions.