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Bitcoin has surged past $104,000, edging closer to its previous record high and gaining over 10% in value over the past week. As of now, Bitcoin is trading at $104,325, just 3.79% below its all-time high of $108,786, achieved in January. This recent rally has been fueled by renewed optimism surrounding international trade developments, offering fresh confidence to global markets.

U.S.-China Trade Talks Boost Market Sentiment

On May 11, the White House announced that trade negotiations between the United States and China have made “substantial progress.” While no official deal has been finalized, the update, delivered via a joint statement from U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, has generated positive momentum in financial markets.

“I am happy to report that we made substantial progress between the United States and China in the very important trade talks,” Bessent stated. However, he stopped short of confirming a finalized agreement.

Bitcoin’s price movements have been particularly sensitive to geopolitical developments. Earlier trade actions, such as the tariffs imposed on Canada and Mexico in February and those introduced in April, caused significant selloffs in the crypto market, wiping out billions in market capitalization. This time, however, investors are cautiously optimistic as the potential for de-escalation grows.

Institutional Demand Supports Bitcoin’s Rally

Bitcoin’s recent gains appear to be underpinned by strong structural support. According to recent data, spot Bitcoin exchange-traded funds (ETFs) attracted over $1.7 billion in net inflows during the past month, reversing a prolonged negative trend that had persisted throughout much of the trade war period.

ARK Invest’s April report highlighted a decline in Bitcoin balances on exchanges, which have dropped to just 14%—the lowest level since 2018. This trend suggests ongoing accumulation by investors, a signal of confidence in Bitcoin’s long-term potential.

Institutional players are also playing a key role in the market’s dynamics. Strategy’s holdings of 555,000 BTC, considered illiquid, contribute to what some analysts describe as Bitcoin’s deflationary tendencies. CryptoQuant CEO Ki Young Ju recently commented on this, stating, “Bitcoin is deflationary,” emphasizing how institutional accumulation could further tighten supply.

What’s Next for Bitcoin?

While the current rally shows promise, analysts warn that unresolved macroeconomic factors, including the lack of a finalized U.S.-China trade deal, could quickly shift market sentiment. However, if institutional inflows continue and global economic conditions stabilize, Bitcoin may soon challenge its all-time high of $108,786.

For now, the cryptocurrency appears to be consolidating its gains, supported by a mix of increasing demand, reduced exchange supply, and optimism over easing trade tensions. As the market awaits further updates from the White House and other macroeconomic developments, Bitcoin remains a closely watched asset for investors seeking growth opportunities in the digital economy.

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