Bitcoin Surges Close to Record High Amid ETF Interest and Inflation Woes

Bitcoin has climbed above $106,000, edging closer to its all-time high of $108,786 from January. Renewed interest in Bitcoin ETFs, aided by $2.8 billion in net inflows in May, has driven this rise. Inflation concerns have intensified after Walmart announced price hikes due to tariffs on imports. The Federal Reserve’s stable interest rates are contributing to this complex economic backdrop, affecting investor sentiment on risk assets, including crypto.

Bitcoin is on the rise, hitting over $106,000 recently, getting ever closer to its all-time high of $108,786 set back in January. This surge is not just a happenstance; it is coming amidst a resurgence of interest in exchange-traded funds (ETFs) and shifting economic signals that are attracting more investors towards riskier assets. CoinGecko reports that as of Sunday evening, the cryptocurrency was trading around $106,500, spurred on by a two-week uphill trend.

Unlike previous spikes dominated by retail speculation, this current rally is marked by strong inflows into spot Bitcoin ETFs and a steady expectation of interest rates. Additionally, inflation discussions are resurfacing, particularly with tariffs on essential imports threatening to drive prices up this summer. A recent note from QCP Capital, based in Singapore, hints that more room for growth in digital assets is likely, especially with Coinbase gearing up for its inclusion into the S&P 500 on May 19. The firm pointed out that history suggests that such index inclusions tend to prompt short-term boosts as passive managers realign their assets to match benchmarks.

In fact, U.S. spot Bitcoin ETFs have attracted over $2.8 billion in net inflows just in the first half of May alone. As reported by SoSoValue, the most considerable single-day gain came earlier this month on May 2, which saw inflows total a whopping $674.9 million. By mid-May, total inflows reached $41.77 billion, pushing net asset values beyond $122 billion—a significant milestone for the market.

The macroeconomic context further supports this movement. The Federal Reserve has kept its key interest rate steady at between 4.25% and 4.50%, mindful of mixed economic signals. Chair Jerome Powell acknowledged the bank’s readiness to adapt depending on how data evolves, but he does not foresee immediate changes in strategy. Inflation remains a pressing issue, especially as fresh trade policies shake up supply chains, which might enhance Bitcoin’s reputation as a safeguard against inflation, should price pressures persist.

While a temporary agreement to reduce tariffs between the U.S. and China offers a breather, elevated tariffs still linger, especially for electric vehicles, semiconductors, and consumer electronics. More recently, Walmart—the largest retailer in the U.S.—announced plans to hike prices this month and into early summer, as tariff-impacted products begin filtering onto store shelves. Walmart’s Chief Financial Officer, John David Rainey, described the scale and rapidity of these price changes as “somewhat unprecedented in history,” which signals a complex inflation scenario ahead.

The retailer didn’t give a profit forecast for the current quarter, due to uncertainty over how much additional cost it might take on to stay competitive. Walmart’s predicament underscores broader worries that trade-associated price hikes could muddle the inflation outlook further. This may, in turn, cause investors to rethink the implications of enduring price pressures on monetary policy and overall market sentiment, especially concerning cryptocurrencies.