Bitcoin on record: What factors are driving the cryptocurrency?

Bitcoin on record: What factors are driving the cryptocurrency?

On May 16, 2025, the crypto market is showing positive signs as the tariff dispute between the US and China eases. This development supports not only Bitcoin but also other cryptocurrencies such as Ethereum. Bitcoin reached a price of $102,575 on Thursday morning, moving closer to its record high of $109,110 set in January. In April the price had fallen to around $75,000, which makes the current price development particularly remarkable. Bitwise expert André Dragosch highlights that the return of risk appetite, a Bitcoin supply deficit and a weaker US dollar are key factors for this positive development.

In April, physically backed Bitcoin ETNs in Europe recorded net inflows of $204 million, while global inflows reached nearly $5 billion. Ethereum and Ripple also recovered but are still far from their highs. Physically backed Ethereum ETNs were able to generate net inflows of just $2 million in Europe, compared to $160 million globally. These numbers indicate a “turnaround” in the European crypto market, with the majority of inflows going into Bitcoin trackers, as 21Shares reports.

Trading activities and market behavior

Trading in Bitcoin ETNs is currently quiet, with the exception of the VanEck Bitcoin ETN. The most traded crypto ETN on Xetra in April was CoinShares Physical Bitcoin, followed by Bitwise Physical Bitcoin. Analysis shows that Bitcoin and the Nasdaq 100 tech index have performed similarly, although there are differences in market reaction. Bitcoin is increasingly seen as a macroeconomic hedge in a market hit by trade disputes and inflation. Michielsen of 21Shares highlights that Bitcoin has decoupled from traditional risk assets, while Timo Emden of Emden Research warns of ongoing trade disputes that could have a negative impact at any time.

Future of crypto ETNs

A further step towards regulation and market development is expected from the London Stock Exchange (LSE), which will accept applications for Bitcoin and Ether exchange-traded notes (ETNs) in the second quarter of 2024. These ETNs must be backed by Bitcoin or Ether and are traded on major exchanges. The Financial Conduct Authority (FCA) has clarified that evidence of the creation of market segments for crypto-backed ETNs is met with recognition. However, it is noted that these products are intended for professional investors and involve high risks.

The FCA emphasizes that crypto assets are largely unregulated and investors could potentially lose all their money. These ETNs, which are unsecured debt securities and track an underlying index, do not offer regular interest but do provide potential returns based on the performance of the index. Compared to ETFs, ETNs offer limited benefits, and the introduction of crypto-backed ETNs could have both positive and negative impacts on the crypto industry, depending on your perspective on decentralization and regulation.

In summary, the crypto market faces exciting challenges and opportunities as the dynamics between regulation and decentralized trading continue to evolve. Current developments show that Bitcoin and other cryptocurrencies continue to play a significant role in the global financial landscape.

For more information see finance.net and cryptobriefing.com.