On May 22, 2025, during early Asian trading hours, Bitcoin made headlines by soaring more than 4%, reaching an astonishing new all-time high of $111,544. This surge follows a brief dip to $106,000, showcasing a robust investor appetite for alternative assets amidst escalating macroeconomic uncertainty.
The immediate catalyst for this impressive feat appears to be linked to the disappointing demand observed in the U.S. Treasury’s recent $16 billion 20-year bond auction, wherein investors were driving for lower prices. Consequently, this situation led to a stark increase in bond yields, surpassing 5.1%. It is crucial to note that in the bond markets, there exists an inverse relationship between yields and prices: a decline in demand results in lower prices and higher yields. While higher yields typically render bonds more appealing, a rapid increase can signal a lost faith in government debt.
This ripple effect has been palpable across other maturities as well. For instance, the yields for the 10-year and 30-year U.S. Treasuries have climbed to 4.58% and 5.08%, respectively. Additionally, Japan’s 30-year yield reached a record 3.19%. Such upheaval in long-term government debt is typically perceived as a safe haven during periods of financial distress, highlighting a broader sense of unease among investors.
According to analysts from The Kobeissi Letter, the concern extends beyond U.S. debt and resonates as a global issue. In their assessment, “Government bonds are no longer reliably playing their safe-haven role during market stress.” As a result, an increasing number of investors seem to be reallocating their capital towards assets like Bitcoin (BTC), which are increasingly recognized as hedges against inflation, fiscal instability, and currency devaluation.
Experts from the crypto exchange Nexo have commented on Bitcoin’s rise, stating, “Bitcoin’s new high has been concocted by an array of favorable ingredients in the macro cauldron.” They attribute this momentum to soft U.S. inflation data, a de-escalation in U.S.-China trade tensions, and even Moody’s recent downgrade of U.S. sovereign debt. This situation hints at a potential three-month window for risk assets to flourish.
Supporting this bullish trend, on-chain data reveals that Bitcoin’s realized market cap has surged past $912 billion, reflecting a $27 billion capital inflow since early May. Notably, the inflows into exchanges have dropped by 82% since November, indicating fewer holders are selling. Furthermore, Tether (USDT) balances on exchanges have reached a record $46.9 billion, indicating a strong liquidity presence in the market.
The institutional demand for Bitcoin shows a positive trajectory as well. Recent data highlights that Bitcoin exchange-traded funds have garnered upwards of $4.24 billion in inflows over the last month.
In conclusion, with a notable 15% of all Bitcoin now held by public companies, the cryptocurrency is actively being tested as a macro hedge. As traditional safe havens face pressure, Bitcoin’s role is under the spotlight, and early indications suggest it is rising to the challenge.
