What happened?
In May 2025, Bitcoin's price soared close to historical highs, and despite a decrease in daily trading volume, the average trading fee rose to $2.4, indicating strong demand for limited block space.
The U.S. spot Bitcoin ETF attracted over $2.8 billion in net inflows in the first half of May, with total assets exceeding $122 billion, indicating high interest from institutional investors. Meanwhile, the non-liquid supply of Bitcoin reached a historical high, suggesting potential supply shocks in the market.
The Federal Reserve's decision to maintain interest rates and inflation concerns raised by retailers due to tariff hikes have enhanced Bitcoin's attractiveness as an inflation hedge. These macro factors, combined with ETF capital inflows, have jointly driven this round of Bitcoin's rise.
Prices are nearing historical highs, and trading fees are rising sharply.
Recent data shows that Bitcoin performed strongly in May 2025, with prices soaring to levels close to historical highs, while transaction fees on the blockchain also increased, reflecting ongoing market demand for this leading cryptocurrency.
Since early May, Bitcoin's price has continued to rise. On May 18, Bitcoin's price reached approximately $106,000, and even broke this barrier on the 19th, approaching the historical high of $108,786 set in January. Although there was a slight pullback afterward, it remains at a high level of around $104,500.
Along with the price increase, there has been a rise in the average transaction fees on the Bitcoin blockchain.
According to data from The Block, the seven-day moving average trading fees for Bitcoin have risen by about $1 since early May, reaching $2.4, setting a record high since 2025.
The average daily trading volume reached as high as 507,000 on April 22, although it has since declined by 35% to 330,000, the increase in trading fees seems to indicate a rising demand for limited block space.
Tightened supply and institutional capital inflow
Analysis indicates that Bitcoin's 'non-liquid supply' (the amount of Bitcoin in wallets with long-term inactivity) has reached a historic high, which also means that the amount of Bitcoin available for trading in the market is decreasing. If demand continues to grow, this supply tightening could trigger further price increases.
At the same time, Bitcoin's dominance in the cryptocurrency market is gradually recovering, which may indicate that the previous decline in Bitcoin's market share is not a fundamental change in market structure (such as entering a long-term altcoin bull market), but more like a result of short-term capital movements in the market.
In addition, the strong inflows into the U.S. spot Bitcoin ETF have provided significant momentum for this round of price increase.
In just the first half of May, the U.S. spot Bitcoin ETF saw over $2.8 billion in net inflows, with a single-day inflow of $674.9 million on May 2.
As of May 16, cumulative inflows have reached $41.77 billion, with total assets exceeding $122 billion. Unlike past price increases driven by retail speculation, this rise in Bitcoin is more propelled by strong ETF capital inflows, stable interest rate expectations, and renewed discussions around inflation.
The macroeconomic backdrop has also provided support for Bitcoin's performance.
The Federal Reserve maintained the benchmark interest rate at 4.25% to 4.50%, adopting a cautious stance. However, the re-emergence of inflation concerns, especially warnings from U.S. retailers like Walmart that trade tariffs may lead to future price increases, has again enhanced Bitcoin's appeal as an inflation hedge.
Looking ahead, the market outlook for Bitcoin is generally optimistic. With increased demand, tightened supply, and strong institutional fund inflows, Bitcoin is in a critical upward channel.
Reference: decrypt, the block
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