Bitcoin surged over 11% between April 20 and April 26, reclaiming the $94,000 level—the highest in two months. This strong rebound followed positive signals from the Trump administration regarding a pause in reciprocal tariffs, alongside robust corporate earnings. Analysts point to three major bullish drivers: a wave of short squeezes, weakening correlation with equities, and sustained institutional demand—all of which could propel Bitcoin toward a new all-time high above $100,000.
Record ETF Inflows Signal Strong Institutional Demand
One of the clearest signs of renewed investor confidence is the record-breaking inflow into spot Bitcoin ETFs. Last week alone, these funds attracted a net $3.1 billion in fresh capital—the largest weekly inflow since their inception. This surge underscores growing trust in Bitcoin as a legitimate asset class among institutional investors.
While retail traders often react emotionally to price swings, institutions tend to take a longer-term view. Their increasing participation suggests that Bitcoin is being viewed not just as a speculative asset but as a strategic hedge against macroeconomic uncertainty. With ETFs offering a regulated and accessible entry point, this trend is likely to continue fueling upward momentum.
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Short Squeeze Accelerates Price Momentum
Before the recent rally, bearish sentiment had built up in the derivatives market, with many traders betting on a price correction. However, the sudden upward move caught these shorts off guard.
Since April 21, more than $450 million worth of Bitcoin short positions have been liquidated. This kind of forced buying—triggered when leveraged traders are wiped out—adds significant upward pressure on price, creating a self-reinforcing cycle known as a short squeeze.
The scale of this liquidation wave highlights how fragile bearish sentiment had become. Even though some indicators briefly flashed caution signals (such as a temporary dip into negative funding rates in perpetual futures), the broader market structure remains resilient.
Weakening Correlation With Stock Markets
For much of early 2025, Bitcoin moved in lockstep with traditional financial markets, particularly the S&P 500. From March to mid-April, the 30-day correlation between Bitcoin and the S&P 500 reached as high as 60%, reinforcing the idea that crypto was still heavily influenced by risk appetite in equities.
However, that dynamic has shifted dramatically.
As of late April, the 30-day correlation has dropped to just 29%, indicating that Bitcoin is increasingly decoupling from stock market trends. This divergence suggests that Bitcoin is maturing into an independent asset class—driven more by its own supply-demand dynamics than by broader market sentiment.
While strong tech earnings and easing trade tensions boosted stocks, Bitcoin’s rally appears to be powered by different forces: ETF inflows, halving supply constraints, and growing recognition as a store of value.
Bitcoin vs. Gold: The Digital Gold Narrative Gains Ground
Gold briefly touched an all-time high of $3,500 per ounce on April 22 but failed to sustain momentum. In contrast, Bitcoin has held firm above $90,000—a level many see as psychologically significant.
This resilience strengthens Bitcoin’s case as “digital gold.” While gold remains a traditional safe-haven asset, its recent stagnation has prompted investors to reconsider alternatives. Bitcoin, with its fixed supply cap and growing adoption, is increasingly seen as a superior hedge against inflation and currency devaluation.
The longer Bitcoin maintains prices above $90,000, the more confidence investors will have in its ability to break past $100,000.
Perpetual Futures vs. Monthly Contracts: A Tale of Two Markets
Derivatives data reveals an interesting split between retail and institutional behavior.
Retail Caution: Negative Funding Rates Signal Hesitation
Perpetual futures contracts—popular among retail traders—saw funding rates turn sharply negative on April 26. Normally, positive funding rates indicate bullish sentiment, as long-position holders pay shorts to maintain leverage. A negative rate suggests that shorts are paying longs, often signaling bearish sentiment or market exhaustion.
Yet this anomaly occurred amid rising prices, making it unusual for a bull market. It reflects retail caution despite strong price action.
Institutional Confidence: Rising Futures Premium
In contrast, the two-month Bitcoin futures basis (or premium) climbed to its highest level in seven weeks on April 26, reaching 6.5% annualized—well within the neutral 5%–10% range and far from bearish territory.
Monthly futures contracts are preferred by institutions because they avoid volatile funding payments. The growing premium indicates strong demand for longer-term bullish exposure, suggesting that professional traders remain confident in further upside.
This divergence—retail hesitation versus institutional accumulation—is often seen at key turning points. Historically, institutional buying tends to outweigh retail skepticism over time.
FAQ: Your Top Questions Answered
Q: Can Bitcoin really break $100,000 in May 2025?
A: While no price prediction is guaranteed, current fundamentals—including strong ETF inflows, low short interest after recent liquidations, and weakening stock correlation—suggest favorable conditions for a breakout above $100,000.
Q: What does low S&P 500 correlation mean for Bitcoin?
A: A lower correlation means Bitcoin is acting more like an independent asset rather than a risk-on play tied to tech stocks. This enhances its appeal as a portfolio diversifier and strengthens its case as "digital gold."
Q: Are negative funding rates a bearish sign?
A: Not necessarily. While negative funding rates can signal bearish sentiment, in this case, they coincided with strong price gains and massive short liquidations—indicating dislocated retail positioning rather than genuine market weakness.
Q: How do monthly futures differ from perpetual contracts?
A: Monthly futures have fixed expiration dates and no ongoing funding fees, making them ideal for institutions seeking predictable costs. Perpetual contracts allow indefinite holding but come with fluctuating funding rates influenced by market sentiment.
Q: Is the Bitcoin halving still relevant for price movement?
A: Yes. The April 2024 halving reduced new supply by 50%, creating structural scarcity. Historically, major price rallies have occurred 6–12 months post-halving, placing mid-2025 firmly within the typical bull cycle window.
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Final Outlook: Bullish Fundamentals Remain Intact
Despite pockets of retail skepticism reflected in derivatives metrics, the broader picture for Bitcoin remains overwhelmingly positive. Institutional demand via spot ETFs continues to grow, short sellers have been largely flushed out, and Bitcoin is demonstrating increasing independence from traditional markets.
The convergence of macro stability (e.g., paused trade tensions), structural scarcity (post-halving supply shock), and growing adoption paints a compelling case for further gains in May and beyond.
As Bitcoin holds above $90,000 and futures premiums rise, the path toward $100,000 appears increasingly viable—not driven by speculation alone, but by fundamental shifts in how the world views digital scarcity and value storage.
Whether you're watching ETF flows, funding rates, or intermarket correlations, one thing is clear: Bitcoin is no longer just another volatile tech asset. It's evolving into a cornerstone of modern finance.
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