Boom Time for Bitcoin! Unveiling the Factors Driving its 100% Yearly Growth
The digital currency Bitcoin experienced a notable decline on Tuesday, retreating from a historic peak that momentarily propelled it above $123,000 for the first time. Despite this dip, Bitcoin remains significantly elevated compared to its levels from a year ago, trading at nearly double its previous value.
This recent surge is distinct from previous cycles, as it is not primarily driven by retail fervor or meme-stock dynamics. Instead, it is fueled by structural demand, macroeconomic positioning shifts, and an increasing wave of adoption among Wall Street institutions.
Last week, spot Bitcoin Exchange Traded Funds (ETFs) amassed $2.7 billion, with a single day inflow of nearly $1.3 billion – the second-largest on record. Notably, BlackRock’s iShares Bitcoin Trust now manages close to $90 billion in assets, placing it among the 20 largest ETFs in the nation.
Aggregate assets under management by U.S.-listed spot Bitcoin ETFs surpassed $153 billion – a figure that was zero just 18 months ago. This surge in demand is tightening supply and reinforcing Bitcoin’s standing as a mainstream macro asset. Financial advisors, sovereign wealth funds, and corporate treasuries are allocating at record rates. Holdings by public companies increased by 23% last quarter to $91 billion, according to Bitwise.
Companies such as GameStop and Trump Media are adopting the strategy of Michael Saylor, treating Bitcoin as a strategic reserve. Donald Trump’s company is planning to invest $2.5 billion in Bitcoin. Meanwhile, a wave of reverse mergers, backed by SoftBank, Cantor Fitzgerald, and others, is transforming dormant companies into Bitcoin holding vehicles. New entrants like ProCap, which recently raised over $750 million and aims to hold up to $1 billion in Bitcoin, are eagerly pursuing public listings via Special Purpose Acquisition Companies (SPACs), contributing further to the perceived Bitcoin treasury bubble.
The technical landscape has contributed to this momentum. The June options expiry eliminated selling pressure and triggered a short squeeze, as traders who had bet against Bitcoin near the $110,000 to $120,000 range were compelled to cover. Bitcoin’s futures open interest reached a record above $88 billion, indicative of growing conviction from institutions. Ethereum open interest has also been hovering near all-time highs.
Bitcoin has reestablished its correlation with the Nasdaq. After temporarily decoupling during the ETF-driven surge, it is now synchronized once more with tech stocks. The Nasdaq closed at a record high on Monday, bolstering sentiment across risk assets – including ether, solana, and XRP.
Policy clarity in Washington may soon become a reality. In May, the Department of Labor paved the way for 401(k) plans to offer access to Bitcoin ETFs, potentially facilitating retirement savings allocations and deepening the institutional base. This week, the House is considering a trio of landmark crypto bills, which Republican lawmakers have dubbed “Crypto Week.” The legislation includes a framework for dividing oversight of digital assets between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), new rules for stablecoins, and a bill to prevent the creation of a central bank digital currency.
Although none of the proposals directly target Bitcoin, the broader message is clear: Washington is beginning to define the outlines of a regulatory framework, and traditional finance is already positioning itself around it. Until now, asset managers, banks, and trading platforms have largely remained on the sidelines, deterred by a wave of SEC enforcement actions and legal uncertainty over what constitutes a security versus a commodity.
The Clarity Act aims to resolve this debate. It would grant the CFTC jurisdiction over digital commodities like Bitcoin – potentially Ethereum as well – while narrowing the SEC’s domain. This legislation also seeks to clear a path for broker-dealers to handle crypto legally. Over time, it could open the door for institutional decentralized finance by allowing traditional firms to experiment with on-chain finance without immediately triggering exchange or clearinghouse registration requirements.
