Since hitting a low in April, global stock markets have rallied strongly, showing a historic bull market rebound.
The S&P 500 index has risen 6.58% year-to-date. However, this increase seems trivial compared to Bitcoin. Bitcoin hit an all-time high yesterday, breaking through $122,000. Due to profit-taking by speculators, Bitcoin fell over 2% this morning, but it is still up more than 25% year-to-date.
Interestingly, according to Deutsche Bank's research, it reached this milestone with lower volatility than its historical record.
Of course, there are many reasons for this, including the Trump administration's regulatory support for cryptocurrencies. But Marion Laboure and Camila Siazon of Deutsche Bank wrote in a report seen by (Fortune) magazine that the fundamental reason for Bitcoin's rise is the influx of traditional fiat cash from the traditional financial sector.
The amount is astonishing:
New Bitcoin ETFs issued by Wall Street funds have attracted $35 billion in inflows this year.
Year-to-date, inflows have increased by another $50 billion.
DB analysts stated: 'Just last Thursday, inflows into U.S. Bitcoin ETFs reached $1.17 billion.'
BlackRock's iShares Bitcoin Trust alone holds $80 billion—this trust was established only 18 months ago.
It took the SPDR Gold Shares ETF 15 years to reach this level.
The steady inflow of traditional funds has reduced Bitcoin's volatility—Bitcoin has experienced significant devaluations multiple times. 'The sharp inflow of ETF funds has enhanced Bitcoin's liquidity and kept cryptocurrency trading prices within a relatively narrow range compared to previous years,' Laboure and Siazon stated.
Another factor driving Bitcoin's rise is the depreciation of the dollar. The dollar index shows that the value of the dollar against other currencies has fallen by nearly 10% this year. Investors are seeking to move cash elsewhere. 'With the U.S. signing a tax bill this month, effectively locking in a GDP deficit of 6.5%-7% for the next few years, we are beginning to witness a trend of de-dollarization (the dollar index has dropped nearly 10% year-to-date), which is prompting investors to turn to alternative assets like gold and Bitcoin,' the report noted.
Here’s a snapshot of the market conditions before the opening of New York:
The U.S. Consumer Price Index will be released at 8:30 AM Eastern Time. The current CPI is 2.4%, and analysts expect it to rise by 0.3% to 2.7%.
S&P 500 futures rose 0.31% before the opening, with the underlying index up 0.65% yesterday.
The Hong Kong Hang Seng Index rose 1.6% this morning.
Japan's Nikkei 225 index rose by 0.55%.
In early trading, the Stoxx Europe 600 index rose by 0.3%.
The UK's FTSE 100 index was flat in early trading but is expected to break the 9,000-point mark for the first time.
Bitcoin fell by 2.56% to $116,000.
