Bitcoin is nearly double where it was a year ago. This is what's behind the run

On Tuesday, Bitcoin traded at approximately $116,000, experiencing a slight retreat from its unprecedented peak of over $123,000—marking a historic milestone for the world's leading cryptocurrency. Despite this recent decline, Bitcoin is still valued at nearly double its price from a year ago. Unlike past surges that were often characterized by retail enthusiasm and meme-stock frenzies, this current rise is being driven by structural demand, changing macroeconomic conditions, and a significant wave of adoption from Wall Street. Notably, spot Bitcoin ETFs saw an impressive inflow of $2.7 billion just last week, including a record $1.3 billion in a single day, which is the second-highest inflow ever recorded. BlackRock's iShares Bitcoin Trust has amassed almost $90 billion in assets, positioning it among the top 20 ETFs in the nation, as per Bloomberg Intelligence. Currently, U.S.-listed spot Bitcoin ETFs manage over $153 billion—an astonishing increase from zero just 18 months prior. This surge in demand is tightening the supply, further solidifying Bitcoin’s status as a key macro asset. Financial advisors, sovereign wealth funds, and corporate treasuries are allocating resources toward Bitcoin at unprecedented rates. Public company holdings rose by 23% last quarter, reaching $91 billion, according to Bitwise. Companies like GameStop and Trump Media are now adopting strategies that treat Bitcoin as a crucial reserve asset, with Trump Media planning to acquire $2.5 billion worth of Bitcoin. Additionally, a series of reverse mergers, backed by financial giants such as SoftBank and Cantor Fitzgerald, are transforming dormant companies into Bitcoin holding entities. New players like ProCap are racing to go public via SPACs after recently raising over $750 million, aiming to hold up to $1 billion in Bitcoin. This influx has led some analysts to label the situation as a burgeoning Bitcoin treasury bubble. The technical indicators have also contributed to this upward momentum. The expiry of June options alleviated selling pressure and sparked a short squeeze, forcing traders who had bet against Bitcoin at the $110,000 to $120,000 range to close their positions. Bitcoin’s futures open interest has soared to a record high of over $88 billion, indicating growing institutional confidence. Ethereum’s open interest has similarly remained close to all-time highs. Furthermore, Bitcoin has rekindled its correlation with the Nasdaq. After a brief divergence during the ETF-driven rally, it has realigned with tech stocks, with the Nasdaq recently hitting a record high, which has positively influenced the sentiment across various risk assets, including Ethereum, Solana, and XRP. In Washington, significant regulatory clarity may soon emerge. The Department of Labor recently paved the way for 401(k) plans to include Bitcoin ETFs, potentially opening up avenues for retirement savings to be allocated toward cryptocurrencies. This week, the House is set to discuss a trio of pivotal cryptocurrency bills, dubbed "Crypto Week" by Republican lawmakers. These proposals aim to delineate the oversight of digital assets between the Securities and Exchange Commission and the Commodity Futures Trading Commission, introduce new regulations for stablecoins, and prevent the establishment of a central bank digital currency. While these legislative efforts do not directly target Bitcoin, they signal a broader movement toward establishing a regulatory framework that traditional financial institutions can navigate. Until now, asset managers, banks, and trading platforms have largely refrained from engaging with cryptocurrencies due to uncertainty fueled by SEC enforcement actions. The proposed Clarity Act would assign the CFTC jurisdiction over digital commodities like Bitcoin and possibly Ethereum, while narrowing the SEC's focus. This clarity could facilitate a lawful pathway for broker-dealers to handle cryptocurrencies, potentially paving the way for institutional decentralized finance to explore on-chain finance without facing immediate registration obstacles.