Bitcoin (BTC) Breaks Above $110,000, Reigniting Bullish Sentiment

Bitcoin (BTC), the world's largest and most influential cryptocurrency, is once again back in the spotlight

Bitcoin (BTC) price is showing no signs of slowing down as the world’s largest cryptocurrency continues to rally, this time pushing above the $110,000 mark amid a sharp rally on Monday morning. According to CoinMarketCap data, BTC is up 3.98% over the past 24 hours and 7.12% over the past week.

As the cryptocurrency market recovers from the recent downturn, Bitcoin has once again come into the spotlight with its persistent upward trajectory. But what exactly drove Bitcoin’s surge today?

Institutional capital continues to flow into spot Bitcoin ETFs in the United States. Since the approval of multiple spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) earlier this year, institutional adoption has grown rapidly.

Data from Farside Investors shows that ETFs recorded a net inflow of $667.4 million on Friday, May 19, with BlackRock’s IBIT leading the surge with $305.9 million, followed by Fidelity’s FBTC at $188.1 million.

Source: Farside Investors

These products have lowered the barriers for institutional players such as pension funds, asset managers, and family offices to gain direct exposure to Bitcoin without dealing with self-custody or regulatory complexity. The demand surge from these entities is helping create consistent buying pressure that is lifting Bitcoin’s spot price.

Moreover, analysts estimate that the cumulative ETF inflows since January 2025 have exceeded $38 billion – more than double Bloomberg Intelligence’s early-year forecast of $15 billion. As these funds accumulate more BTC, the circulating supply available on exchanges is shrinking, a bullish dynamic that amplifies price action.

The U.S. Dollar Index (DXY) has weakened over the past few trading sessions, falling from above 100 to around 99.40 as of Monday, May 22, according to Investing.com's data. This shift in the dollar index comes as the market anticipates the Federal Reserve to begin cutting interest rates before the end of the year.

Source: TradingView

In his most recent remarks at the Economic Club of Chicago, Fed Chair Jerome Powell acknowledged that while inflation remains above the central bank’s 2% target, it is gradually easing.

“Inflation has moved down from its peak last year, but it remains elevated. We will need to see significantly more progress on inflation to be confident that it is on a path to return to 2 percent,” Powell said on Thursday.

He added that the Fed remains data-dependent and is prepared to adjust policy if incoming economic indicators warrant a shift. He also highlighted that new trade-related tariffs could pose additional inflationary pressure, which the Fed will monitor closely.

This shift toward a more cautious and potentially dovish tone has reignited investor appetite for risk assets, including equities, tech stocks, and cryptocurrencies.

Bitcoin, often viewed as a macro hedge against fiat debasement and monetary easing, has historically benefited from such environments. As U.S. Treasury yields fall in anticipation of rate cuts, capital is rotating toward higher-beta assets with asymmetric upside potential, and Bitcoin remains a leading candidate.

On-chain signals are sending a more nuanced picture of the current market environment. From CoinGlass, the supply held by long-term holders (LTH) has slightly decreased for the second consecutive month, dropping from its peak of 14.29 million BTC in March.

Source: CoinGlass

This suggests that while many LTHs maintain a long-term view, some have begun realizing profits amid recent price surges – a pattern often seen near local tops.

Meanwhile, exchange balances continue to trend downward. Data from CryptoQuant shows that BTC held on centralized exchanges has fallen to around 2.6 million, down from over 3.4 million in 2022.

Source: CryptoQuant

However, analysts caution that a portion of these outflows may reflect internal reshuffling between ETF custody wallets and cold storage rather than direct investor accumulation.

Whale wallets, on the other hand, are showing clear signs of accumulation. According to Santiment, wallets holding between 10 and 10,000 BTC have collectively added over 83,000 BTC in the past 30 days. This surge in large-scale accumulation underscores a broader institutional confidence in Bitcoin’s medium- to long-term trajectory.

Bitcoin’s rapid upward move is also being amplified by derivatives market dynamics. Data from Coinglass shows that more than $262 million worth of BTC short positions were liquidated in the past 24 hours, as of Monday, May 21. Binance alone recorded $66.3 million in short liquidations on the BTC/USDT pair, marking the largest single-day liquidation for the exchange this year.

Source: Glassnode

Such short squeeze events