Recent US Treasury funds saw $19 billion in inflows, marking the highest since March 2023. Meanwhile, foreign central banks have cut their US Treasury holdings to a 22-year low, as gold reserves have risen to an 18% share. These shifts suggest potential bullish trends for Bitcoin, reminiscent of its previous price surges tied to similar economic conditions, yet a looming recession may pose risks to its upward trajectory.
The financial landscape is undergoing a notable shift, which may significantly impact Bitcoin’s price trajectory. Last week, US Treasury funds registered a remarkable inflow of $19 billion, marking the highest surge since March 2023. This figure eclipsed the prior pandemic peak of $14 billion, and the four-week moving average now stands at $7 billion, the highest seen in quite a while.
Interestingly, bond prices have seen a rise as the 30-year US Treasury yield dropped by 30 basis points from its peak in April. This trend suggests that investors are opting for the safety of bonds, reducing borrowing costs for the US while bolstering market liquidity and stability. Yet, foreign central banks—reportedly facing pressure from tariff disputes—have reduced their Treasury holdings to just 23%, a level not seen in 22 years.
In a surprising twist, gold reserves have surged to 18% of global reserves, hitting a 26-year peak and representing an 8% rise since 2015. China has notably doubled its gold reserves to 7.1%, signalling a significant shift in global financial strategies. This trend away from the US dollar aligns with patterns that historically fizzled out into favourable winds for Bitcoin.
Recall the frenzy during the pandemic when US Treasury inflows spiked. Back then, Bitcoin’s value rocketed from $9,000 to almost $60,000 by early 2021. Gold also saw its global reserves share swell by 14.5% in just 18 months. Many analysts are now saying that today’s conditions, dominated by a stabilising bond market and increasing gold interests, could act as fuel for Bitcoin’s next big leap.
Last year, despite recession fears causing US Treasury yields to climb, Bitcoin still managed a 47% increase within a month while the Nasdaq took an 8.7% plunge. With yields now gradually easing and central banks exhibiting reluctance towards the US dollar, it seems Bitcoin’s standing as a global store of value is becoming more appealing.
Yet, there are some warning bells. Should a global recession hit in 2025, traditional investor habits may kick in, with a preference for liquidity and classic safe havens—like cash or Treasurys—over speculative assets such as Bitcoin. This observed pattern could undermine Bitcoin’s bullish narrative.
Alongside these market shifts, a researcher from Capital Flows suggests that the current macroeconomic liquidity may pave the way for Bitcoin to embark on an upward trend. The analyst pointed to BTC’s strong impulse strength as likely indicating a promising direction ahead.
Bitwise CEO Hunter Horsley added that searches for “Bitcoin” are currently at long-term lows—a contrast to earlier cycles when price spikes coincided with increased search volume. This suggests that the present rally is less about retail hype and more about institutional activity and interest.
The shift in market dynamics is clear: institutional adoption seems to be what’s sparking demand now, deviating from previous cyclical behaviours where retail activity played a larger role. Still, it’s worth remembering that investments come with their risks, and this article is not financial advice; diligent personal research remains crucial.
