The global financial market is experiencing significant volatility, and Bitcoin (BTC) may be the biggest beneficiary. The latest data shows that U.S. Treasury bond funds recorded a net inflow of up to $19 billion last week, surpassing the pandemic peak of $14 billion in 2020. The 4-week moving average has also increased to $7 billion — the highest since March 2023.
The yield on the 30-year U.S. Treasury bond has decreased by 30 basis points from the April peak, reflecting the price increase of bonds as investors accept lower returns in exchange for safety. Strong demand for safe havens has boosted market liquidity, helping to reduce borrowing costs in the U.S.
However, foreign central banks are retreating, reducing their holdings of Treasury bonds to 23% of total U.S. public debt — the lowest level in 22 years. This indicates that money flowing into bonds is mainly coming from the private sector amidst rising U.S.-China trade tensions.
At the same time, the proportion of gold in global reserves has surged to 18% — the highest level in 26 years, increasing by 8% since 2015. China alone has doubled its gold reserves, reaching 7.1% just from 2023 to now.
The downward trend dependent on the USD is repeating the pattern that previously supported Bitcoin's explosion. During the COVID-19 pandemic, when money flows into Treasury bonds surged, the price of Bitcoin climbed from $9,000 to nearly $60,000 at the beginning of 2021, while the proportion of gold in global reserves increased by 14.5% within just 18 months.
Currently, with a stable bond market and central banks aggressively accumulating gold, Bitcoin may be preparing for a new price surge. In 2023, as Treasury yields rose due to recession concerns, Bitcoin increased by 47% in just one month, while the Nasdaq index fell by 8.7%. Now, as yields are cooling and confidence in the USD weakens, Bitcoin's position as a global store of value is being strengthened.
However, the bullish outlook for Bitcoin could be shaken if the global economy falls into recession in 2025. In a crisis, investors tend to prioritize liquidity and traditional safe assets like cash or U.S. bonds, rather than highly speculative assets like Bitcoin.
Google Trends: Search for 'Bitcoin' is at a long-term low
An anonymous global market researcher named Capital Flows indicates that macro money flows and current investment positions are supporting the price increase of Bitcoin. Analyzing the volatility probability chart, Capital Flows notes that BTC is in a strong upward momentum phase.
At the same time, Bitwise CEO – Hunter Horsley – notes that the number of searches for 'Bitcoin' on Google is at a long-term low, indicating that the current price increase is mainly coming from institutions, corporations, and governments, rather than individual investors.
This contrasts with previous cycles, where the volume of Bitcoin searches had a very high correlation with price (r=91% according to SEMrush data), indicating that the market is entering a new phase, with the main momentum coming from widespread adoption at the institutional level.
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Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.