Understanding Why Bitcoin Prices Keep Soaring

Bitcoin smashed another record, rising above $123,000 Monday before giving up some of those gains. Bitcoin treasury company Strategy announced the purchase of $472.5 million worth of bitcoin last week. U.S. spot bitcoin ETFs saw more than $1 billion of inflows on Thursday and Friday last week. The U.S. House of Representatives is scheduled to vote on three crypto-focused bills this week: the CLARITY Act, the Anti-CBDC Surveillance Act, and the GENIUS Act.

Bitcoin (BTCUSD) smashed another record, rising above $123,000 Monday before giving up some of those gains. What's powering the world's largest cryptocurrency to new highs? Institutional buying from bitcoin treasury companies like Strategy (formerly MicroStrategy) and spot bitcoin exchange-traded funds (ETFs) as well as optimism around \"Crypto Week.\"

Strategy Buys More, Investors Flock To Spot Bitcoin ETFs

After taking a week off from its usual Monday purchase announcements, Strategy (MSTR) revealed that it bought 4,225 more bitcoin over the week ending July 13 for $472.5 million. This takes it total bitcoin holdings to 601,550. These most recent purchases were made with funds raised through the company's at-the-market offering programs.

Spot bitcoin ETFs were also extremely active late last week as investors poured money into them. These products hold bitcoin as the underlying asset, and need to purchase more of it as more investors buy the ETF, in turn pushing bitcoin prices higher. Spot bitcoin ETFs saw $1 billion worth of net inflows on Thursday and Friday, according to data from Farside Investors. Total inflows for last week stood at roughly $2.7 billion, with Blackrock's iShares Bitcoin Trust (IBIT) cornering most of that money.

Optimism Around Crypto Week

Another likely driver for rising bitcoin prices is the optimism around regulatory clarity that could result from what lawmakers dubbed as \"Crypto Week.\" The U.S. House of Representatives is expected to vote on three crypto-related bills— the CLARITY Act, Anti-CBDC Surveillance Act, and GENIUS Act. The CLARITY Act is intended to provide clearer guidelines for the regulatory classification of various digital assets, while the GENIUS Act provides a regulatory framework specifically for stablecoins.

\"The big impact of 'Crypto Week' legislation will be reduced risk and downside volatility in the crypto market,\" Bitwise CIO Matt Hougan posted on X. \"FTX, Luna, Celsius, and other scandals happened in large part because we refused to provide reasonable regulations. IMO 70%+ drawdowns are a thing of the past.\"