As traditional financial markets fluctuate, Bitcoin once again proves its unique market position.
Coinmarketcap data shows that on May 21, during US stock trading hours, Bitcoin's price soared to a record high of $109,767.52, with market capitalization briefly exceeding $2.16 trillion, surpassing Amazon to become the fifth most valuable asset globally. At the time of writing, BTC's trading price has retreated to around $108,000, with a 24-hour increase of 1.8%.
With market sentiment high, major bull Michael Saylor directly stated: "If you don't buy Bitcoin at historical highs, you're missing a great opportunity."
A Time Bomb in Traditional Markets?
On the same day, the US Treasury market seemed to be experiencing a "crisis".
After the weak demand for the US 20-year bond auction was announced, US stocks, bonds, and currencies all plummeted. Deutsche Bank analyst George Saravelos viewed the market's reaction as a clear signal of "foreign buyers collectively avoiding US debt assets". The 10-year US Treasury yield once rose to 4.607%, the highest since February 13, while the US Dollar Index dropped 0.5%.
"This is a hidden time bomb," warned Josh Mandell, a former fixed income expert and now a Bitcoin analyst. He explained: "We used to say that a 'failed auction' of 30-year bonds would be a disaster... If not for the Fed's intervention, we might now be facing default risks due to bond rollover failure."
This warning was quickly verified in the stock market, with the Nasdaq index plunging 1.5% within an hour and the S&P 500 falling 1.3%. Such violent market fluctuations precisely explain why more and more funds are flowing into the Bitcoin market.
Renowned market analyst Benjamin Cowen discussed in his podcast that during Bitcoin bear markets in 2014, 2018, and 2022, bond yields rose when other risk assets declined. This situation led to increased government borrowing costs and had a chain reaction across economic sectors like mortgages and corporate financing.
From 2015 to 2025, while markets often amplify Bitcoin's correlation with macroeconomic factors, its own market logic and cyclical patterns are sometimes more critical. Therefore, the correlation between Bitcoin and bond yields fluctuates with changing environments.
Now in May 2025, this correlation has dropped to a historical low - Bitcoin remains strong in an environment of high yields. This "abnormal" trend suggests investors may be reallocating assets.
By the close of US stocks on Wednesday, the Dow was down 1.69%, the S&P 500 fell 1.16%, and the small-cap index plummeted 2.35%. These declines, combined with rising bond yields, indicate funds are fleeing traditional assets.
$110,000: A Critical Battlefield for Bulls and Bears
In this context, every key price point for Bitcoin becomes particularly important. Renowned crypto trader Skew pointed out on X platform that $110,000 has become a critical battlefield in the current market structure. According to his analysis, a large number of sell orders are concentrated around this price, with Binance perpetual contracts showing significantly more sell orders than buy orders, and short positions are accumulating.
"All of this indicates huge liquidity here, which is usually crucial for the market," Skew explained.
This observation aligns with Kretov's view: "Structurally, there's room for a breakout surge, but a violent pullback could happen at any time."
Deeper market data analysis reveals more details. Bitcoin's 24-hour trading volume surged 34.67% to $6.69 billion, showing significantly increased market activity. More notably, futures market open interest increased by 11.18%, totaling $79.84 billion, indicating large amounts of funds betting on Bitcoin's subsequent trend.
However, one phenomenon worth noting is retail investor participation.
According to CryptoQuant data, as Bitcoin approaches historical highs, retail investors' (defined as wallets with transactions of $0-10,000) trading volume accounts for only 3.2% of total volume, in stark contrast to 30% in December 2024. This difference might mean the current rise is primarily driven by institutional funds, while retail investors are either holding or have already exited.
Polymarket contract data shows a 79% probability of Bitcoin breaking $110,000 before the end of May. The probability of reaching $115,000 and $125,000 by the end of May is 37% and 5% respectively. The possibility of breaking $150,000 or $200,000 is currently assessed at around 1%, reflecting market caution about higher prices.
Digital Gold at a Crossroads
Facing such a complex market environment, Bitcoin seems to be standing at a critical crossroads. On one hand, the turmoil in traditional financial markets continues to drive funds into the cryptocurrency sector; on the other hand, declining retail liquidity and pressure at key resistance levels bring uncertainty to the rise.
Renowned anonymous analyst apsk32, based on the "power law curve" model, believes Bitcoin could reach $200,000 in 2025. This prediction is partially supported by technical indicators, such as Bitcoin's Sharpe ratio recently aligning with gold. Jurrien Timmer, global macro director at Fidelity Investments, even suggests investors can allocate assets in a 4:1 ratio of gold to Bitcoin.
Historical data shows that the second quarter has always been Bitcoin's "seasonal rise moment": so far, the 28% increase this quarter has placed it as the fifth-best performing quarter since 2013, and if this rally continues into June, it will once again validate this pattern.
