Bitcoin hit a new all-time high on Wednesday, advancing alongside U.S. stocks, reflecting a continued warming of global market risk appetite. Analysts say this highlights the deep linkage between cryptocurrencies and the stock market, driven by a friendly policy environment under the Trump administration and significant institutional funds entering the market.
On August 13, the cryptocurrency market reached an important moment, with Bitcoin prices breaking through $123,500, surpassing the previous historical high of $123,205.12 set on July 14. This breakthrough almost coincided with the S&P 500 index closing at a historical high for the second consecutive trading day.
Analysts point out that the friendly policy environment created by the Trump administration, combined with the influx of institutional funds, has strongly driven up Bitcoin, with the shift in Federal Reserve policy expectations providing a macro backdrop for this 'convergence of coins and stocks.' Ben Kurland, CEO of the cryptocurrency research platform DYOR, stated:
The slowing inflation, increased expectations for interest rate cuts, and unprecedented institutional participation brought by ETFs have jointly created strong momentum. What’s different this time is a more mature demand base—this round of increases is not just driven by retail enthusiasm, but also by structural buying from asset management firms, corporations, and sovereign funds.
Policy dividends release demand potential.
Since President Trump took office, Washington's friendly legislative environment towards cryptocurrencies has laid the foundation for Bitcoin's steady rise over the past year. Policy support has eliminated regulatory uncertainty, clearing obstacles for institutional investors to allocate digital assets on a large scale.
Under the leadership of Michael Saylor, more and more publicly listed companies are adopting a corporate strategy of accumulating Bitcoin, significantly boosting market demand. This practice has recently expanded to cryptocurrencies like Ethereum, driving up the entire digital asset sector.
Unlike previous cycles dominated by retail investors, this round of the Bitcoin bull market shows clear institutional characteristics. Continuous inflows into exchange-traded funds (ETFs) have provided stable funding support for Bitcoin, maintaining a relatively smooth upward trend even in the face of technical resistance.
The rise of Ethereum is primarily driven by sustained demand from newly active corporate funds, showing a trend of diversification in institutional investment strategies.
The phenomenon of 'convergence of coins and stocks' highlights market risk appetite.
U.S. inflation data this week met expectations, reinforcing the market's bets on a Federal Reserve interest rate cut in September. Expectations of a loose financial environment are driving funds from blue-chip stocks to more volatile digital tokens, providing macro support for the 'convergence of coins and stocks.'
According to previous articles, the mild CPI inflation report in the U.S. has eliminated investors' concerns about stagflation, paving the way for the Federal Reserve to cut interest rates. Global investors have massively bought the most risky assets: from tech giants to small-cap stocks, from emerging markets to cryptocurrencies, almost all categories of risky assets have shown strong upward momentum.
Analysts believe that the high correlation between cryptocurrencies and traditional stock markets has become a significant feature of this round of increases. Speculative market sectors and mainstream benchmark indices draw power from the same source of optimism, reflecting a general increase in current market risk appetite.
Chris Newhouse, Director of Research at Ergonia, pointed out:
Cryptocurrencies and stocks are positively correlated, with Ethereum showing a stronger correlation to the stock market than Bitcoin. Overall sentiment appears positive.
This linkage effect indicates that digital assets are gradually integrating into the risk pricing system of traditional financial markets, with institutional investors viewing cryptocurrencies as an important component of their risk asset portfolios.
