The recent increase in Bitcoin is driven by these factors
On May 7, although Bitcoin's gain since the beginning of the year is only 3.8%, far less than gold's 29%, the global asset management giant BlackRock's Bitcoin spot ETF (IBIT) has already attracted a net inflow of $6.69 billion, ranking sixth in the U.S. ETF fund list, surpassing the largest gold ETF (GLD) which had $6.5 billion in inflows.
This phenomenon indicates that institutional investors are optimistic about Bitcoin's long-term value, even as gold has surged to $3,384 per ounce due to geopolitical tensions and inflation concerns, while Bitcoin has fallen more than 10% from its historical high in January.
Analysts point out that this change shows that Bitcoin can still attract funds during periods of price volatility, further validating its asset allocation value as “digital gold.” It is expected that the scale of Bitcoin ETFs will reach three times that of gold ETFs in the next 3 to 5 years.
At the same time, Singapore's crypto investment firm QCP Capital analyzes that recent fluctuations in the foreign exchange market and legislative measures in New Hampshire have jointly driven the rise of Bitcoin.
On one hand, the drastic fluctuations of the Taiwan dollar have impacted the regional foreign exchange market, particularly the currency pair of Hong Kong dollar and US dollar, prompting the Hong Kong Monetary Authority to take decisive intervention measures, selling HKD 73.3 billion to maintain the peg. This action significantly boosted the Hong Kong dollar exchange rate, leading to a sharp decline in interbank offered rates and triggering hedge funds to unwind their USD/HKD carry trades.
On the other hand, New Hampshire has passed landmark legislation allowing the state government to allocate up to 5% of public funds to Bitcoin and precious metals, making it the first state in the U.S. to establish state-level Bitcoin reserves, positioning Bitcoin as the only eligible digital asset in the state. Its symbolic significance cannot be overlooked and opens new doors for the institutionalization of cryptocurrencies.
It is worth noting that against the backdrop of stabilized foreign exchange market conditions and the passage of legislation in New Hampshire, Bitcoin surged by 3%, recovering to $97,000, erasing previous declines. In summary, the combined effects of these factors have instilled confidence in the market regarding the prospects of Bitcoin and its related derivatives.
Which factor do you think has the greatest impact on the rise of Bitcoin? Leave your thoughts in the comments!
