Bitcoin Hits All-Time High

BTC reached a new all-time high (ATH) of $112,000 on Thursday, May 22, continuing a week of decisive upward momentum. It broke through prior highs throughout the week – starting with Wednesday’s $109k, ripping past $110k, and touching $112k. The previous all-time high was set on January 21, 2025, the day after Trump’s inauguration, at approximately $107k. From there, over the past four months, BTC experienced a sharp correction to $77k, a ~39% decline driven by tariffs uncertainty, geopolitical instability, and a weakening macroeconomic outlook. At the time of writing at 8am on May 23, bitcoin has retreated along with global assets following President Trump's announcement of 50% tariffs on Europe, though BTC remains near its prior all-time high in the $108k - $109k range.

This recent breakout is supported by signals across derivatives markets. Open interest across all exchanges hit an ATH, and the call-put ratio on major exchanges sits at 1.5. Meanwhile, short-term implied volatility has dropped to an 18-month low of 35 - 40%. This mix of bullish sentiment and compressed volatility typically suggests excess leverage is building, and it likely served as a key driver in pushing BTC through resistance.

The timing of BTC hitting an ATH is remarkable. This rally is occurring in contrast to broader market weakness as U.S. equities (S&P 500 and Nasdaq 100) drop, and treasury yields rise. While gold has delivered a 1.7% return this week, its return cannot be compared to BTC’s 8.1%. BTC is increasingly behaving like a store of value as it moves in tandem with gold, but BTC outperforms it in both magnitude and momentum as BTC enters a new phase of price discovery.

The rally in BTC may have been sparked by Moody’s downgrade of U.S. credit rating from Aaa to Aa1, citing unsustainable fiscal dynamics and a ballooning $36 trillion debt load. Following the announcement, equities, bonds, and the USD declined, while BTC and gold rose, an early signal that markets were repricing risk and looking toward non-sovereign assets.

The repricing continued throughout the week. Long-end U.S. Treasury yields rose significantly, with the 30-year yield reaching 5.14% on Thursday, its highest level since 2007. This was preceded by a weak 20-year auction on Wednesday, where investor participation faltered amid mounting concerns over fiscal deficits and growing debt.

Importantly, this dynamic is not isolated to the U.S. In Japan, yields on 30- and 40-year government bonds also hit ATHs this week following a poorly received auction, which was the weakest demand since 2012. The Bank of Japan’s reduction in bond purchases, coupled with a Q1 economic contraction, is creating structural challenges in Japan’s debt market. Long-end yields in the U.K., Canada, and Europe have also climbed, reflecting global investor unease around inflation, trade war, fiscal policy, and sovereign creditworthiness.

These developments have put a spotlight on debt sustainability at a global scale. In the U.S., that backdrop became even more complex on Thursday, when lawmakers advanced a substantial multi-trillion-dollar tax and spending package pushed by the Trump administration. The House Budget Committee approved a proposal incorporating SALT deductions and expansive tax cuts, which could add $5.2 trillion to national debt and increase the federal deficit by $600 billion next fiscal year. This comes at a time when investor tolerance for deficit expansion is already showing signs of fatigue.

Against this backdrop, BTC and gold are emerging as preferred hedges. With traditional safe-haven assets under pressure, BTC’s non-sovereign, supply-constrained nature is gaining increased relevance. Meanwhile, regulatory tailwinds are beginning to support crypto markets as well. As we wrote last week, the SEC has continued to push forward on tokenization, opening the door for broker/dealers to handle digital assets. This could accelerate the integration of public blockchains with traditional capital markets and facilitate broader access to tokenized securities. In parallel, the GENIUS Act cleared cloture in the Senate last week, a key step forward for stablecoin legislation. As highlighted in a previous note, stablecoin regulatory clarity is essential not only for the crypto sector, but also for the global standing of the USD. In the backdrop of a fragile bond market, stablecoins have the potential to reinforce demand for U.S. Treasuries, offering some relief to a weakened demand.

Institutional and sovereign adoption continues to provide consistent price support. On Monday, Strategy purchased 7,390 BTC, while Metaplanet acquired 1,004 BTC, which was its second-largest purchase to date. Strategy further filed to raise up to $2.1 billion through a 10.00% Series A perpetual preferred share issuance (STRF) to fund additional BTC accumulation on May 22. These actions reinforce a steady stream of corporate demand.

On the access front, JPMorgan announced it will offer BTC trading to clients, joining a wave of traditional financial institutions expanding into crypto. Other major banks – including Morgan Stanley, Merrill Lynch, and Wells Fargo – are either enabling or preparing to support crypto and crypto ETF trading. Meanwhile, ETF flows remain strong, with $3.9 billion in inflows since the start of May, further underscoring sustained institutional demand.

Altogether, BTC is increasingly trading in line with its foundational value proposition: a scarce, decentralized, and non-sovereign store of value. As it enters price discovery in a different macro environment, these attributes are becoming more salient. With this week's Bitcoin conference in Las Vegas on the horizon, bitcoiners are hoping for continued price appreciation, though history may not be on their side.