Bitcoin is rapidly approaching its all-time high, fueled by robust ETF inflows, macroeconomic uncertainties, and growing inflation concerns stemming from global trade tensions. As of Sunday evening, the cryptocurrency surged past $105,700 and now trades just above $106,500, according to CoinGecko data. Unlike past rallies largely driven by retail speculation, this bullish run is supported by institutional investment, primarily through spot Bitcoin ETFs. Data from SoSoValue reveals that U.S. Bitcoin ETFs pulled in over $2.8 billion in net inflows during the first half of May alone, with the largest single-day gain of $674.9 million recorded on May 2. By May 16, cumulative ETF inflows reached $41.77 billion, and total net assets had surpassed $122 billion.

ETF Flows and S&P 500 Index Inclusion Fuel Institutional Momentum

Market analysts at QCP Capital, a Singapore-based firm, note that institutional enthusiasm is building ahead of Coinbase’s upcoming inclusion into the S&P 500 on May 19. They believe this index event could act as a short-term catalyst, as passive investment managers adjust portfolios to align with benchmark indices.

“History tells us that index inclusion tends to act as a short-term catalyst,” QCP Capital wrote. “There is further room for digital assets to rally.”

This growing ETF activity marks a significant turning point in Bitcoin’s market dynamics, with institutional interest now outpacing retail FOMO as the main driver of price growth.

Macroeconomic Uncertainty and Inflation Risk Reinforce Crypto Demand

The broader macroeconomic environment is also playing a key role. The Federal Reserve has maintained its benchmark interest rate in the 4.25% to 4.50% range, reflecting a cautious stance amid mixed economic signals. Fed Chair Jerome Powell confirmed last week that policymakers are closely monitoring data but signaled no immediate rate changes.

Meanwhile, renewed trade tensions are reigniting inflation fears. A temporary 90-day tariff reduction deal between the U.S. and China brought brief relief, but steep tariffs remain in place on critical sectors, including electric vehicles, semiconductors, and consumer electronics.

Major retailers are already feeling the pressure. Walmart CFO John David Rainey told the Wall Street Journal that the company expects to raise prices in the coming months, citing the rapid impact of tariff-affected goods.

“The magnitude and speed at which these prices are coming to us is somewhat unprecedented in history,” said Rainey.

Walmart’s decision to withhold a profit forecast for the current quarter highlights the uncertainty businesses face in absorbing cost hikes, which could increase inflation.

Crypto’s Appeal as an Inflation Hedge Strengthens

Amid rising cost concerns, Bitcoin’s narrative as a store of value and inflation hedge is regaining traction. As traditional asset classes face pressure from uncertain trade policy and evolving monetary decisions, investors are reassessing their portfolios, often leaning toward decentralized alternatives like Bitcoin.

The combination of ETF-driven capital, Fed policy steadiness, and tariff-related inflation fears is forming a perfect storm for Bitcoin’s price ascent. Analysts suggest that if current conditions persist, Bitcoin may soon retest or surpass its previous all-time highs, pushing the crypto market further into bullish territory.

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