HFMarkets (hfm.com): New market analysis services.

[HFM]

Date: 22nd May 2025.


Bitcoin Surges Above $111K for the First Time as Institutional Demand and Regulatory Optimism Fuel Rally.



Trading Leveraged products is Risky


Crypto markets outperform as equities stumble under bond market pressure and rising US debt concerns.


Bitcoin hit a new record high on Thursday, crossing the $111,000 threshold for the first time amid growing institutional interest and hopes for improved regulatory clarity in the US. The digital asset rose as much as 3.3% to reach $111,878, according to Bloomberg. Ethereum, the second-largest cryptocurrency, also saw notable gains, climbing up to 5.5% intraday.





Sentiment was lifted by progress in the US Senate on a key stablecoin bill, which investors interpret as a sign of potential pro-crypto regulation under President Donald Trump. This comes alongside mounting demand from major institutional players, including Michael Saylor’s Strategy, which now holds over $50 billion in Bitcoin.


There’s no shortage of demand for BTC from SPAC and PIPE deals, which is manifesting in the premium on Coinbase spot prices.


Several newly formed or obscure public companies are driving fresh demand, funding their Bitcoin purchases through convertible debt, preferred equity, and other instruments. One example is Twenty One Capital Inc., a new firm modelled after Strategy and launched by an affiliate of Cantor Fitzgerald LP in partnership with Tether Holdings SA and SoftBank Group. Meanwhile, a merger between a subsidiary of Strive Enterprises Inc., co-founded by Vivek Ramaswamy, and Nasdaq-listed Asset Entities Inc. will create a Bitcoin treasury company.


‘This rally is not just momentum-driven’, said Julia Zhou, COO of Caladan, a crypto market maker. ‘It’s supported by tangible, sustained demand and supply dislocations’


Bitcoin’s dominance is growing, as alternative cryptocurrencies struggle. An index tracking smaller altcoins has declined about 40% in 2025, while Bitcoin is up 17% year-to-date.


In the ETF space, 12 US Bitcoin exchange-traded funds have attracted around $4.2 billion in inflows this month. On Deribit, the largest crypto options exchange, open interest is heavily concentrated around June 27 expiry calls at $110,000, $120,000, and even $300,000.


The latest breakout confirms the broader bullish trend. The sharp pullback from January’s highs to below $75,000 in April now looks like a correction within a bull market. A firm break above $110,000 could set the stage for a move toward $125,000.


The latest rally coincides with a private dinner on Thursday between Trump and top holders of his memecoin at his golf club near Washington. Ethics experts warn that such events raise concerns about potential conflicts of interest and access through financial contributions. However, analysts say the meeting has had minimal direct market impact.


Asian Markets Retreat on Bond Market Worries and US Debt Concerns


Asian equity markets fell sharply on Thursday as pressure from rising US Treasury yields and concerns over surging American debt rattled investor confidence.


Japan’s Nikkei 225 dropped 1.0% to 36,944.55, while Hong Kong’s Hang Seng Index fell 0.9% to 23,615.21. Mainland China’s Shanghai Composite edged 0.1% lower to 3,383.10. Australia’s ASX 200 slid 0.5% to 8,342.80, and South Korea’s Kospi lost 1.1% to settle at 2,595.69.


The US still has the biggest markets and deepest liquidity, but not even dollar inertia can outrun compound interest and structural deficits forever. The weaker US dollar also weighed on regional markets. A depreciating dollar undermines the value of Asian nations’ dollar-denominated assets and negatively impacts exporters like Japan’s automakers, whose overseas profits diminish when converted to local currency.


In currency markets, the greenback slipped to 143.27 Japanese yen from 143.68 yen. The euro strengthened slightly to $1.1335 from $1.1330. A year ago, the dollar was trading near 150 yen.


Investors are also increasingly wary of President Trump’s policy decisions, particularly on tariffs that affect Asian firms and ongoing negotiations in Congress over a major funding bill.


Wall Street Flat Ahead of Tax Vote


US stock futures were little changed early Thursday as markets awaited the outcome of a vote on President Trump’s proposed tax reform bill. Dow futures dipped 0.1%, while S&P 500 and Nasdaq 100 futures traded flat.


Despite internal GOP disagreements, House Speaker Mike Johnson said a floor vote could happen as early as Thursday night. The latest version of the bill includes more generous deductions for state and local taxes (SALT), aimed at appeasing Republican holdouts.


However, unresolved issues surrounding Medicaid funding and green energy tax credits have investors concerned. Moody’s recently downgraded the US credit outlook, citing the bill’s potentially massive deficit implications as a contributing factor.


Markets reacted on Wednesday with broad declines and a jump in bond yields. The 30-year Treasury yield briefly breached 5%, its highest in months, amid renewed concerns over the US’s growing debt burden.


Beyond politics, investors on Thursday will also digest key economic data, including weekly jobless claims, existing home sales, and the ISM’s Purchasing Managers’ Index (PMI).


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Please note that times displayed based on local time zone and are from time of writing this report.


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Andria Pichidi
HFMarkets


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