Bitcoin Hovers Near $119K as U.S. Inflows Soar, But Derivatives Froth Raises Caution
Bitcoin (BTC) continues to trade just below $119,500 after briefly topping $120,000, buoyed by robust institutional demand out of the United States. Yet signs of overheating are emerging in derivatives markets, prompting warnings from analysts.
CoinShares data shows digital asset investment products notched record-breaking inflows last week, driven largely by U.S.-listed funds, which attracted $3.74 billion. Meanwhile, Germany saw outflows of $85.7 million, reflecting a growing regional divide in institutional crypto sentiment.
One striking shift in institutional positioning is Vanguard’s newfound exposure to bitcoin. Despite previously calling crypto an “immature asset class,” the $10 trillion asset manager has become the largest shareholder in Michael Saylor’s MicroStrategy (MSTR), indirectly making it one of the biggest traditional finance holders of bitcoin, as highlighted in research by Presto.
Institutional interest remains strong overall. QCP Capital noted in a recent update that spot bitcoin ETFs saw net inflows exceeding $2 billion last week.
Still, derivatives markets paint a more cautious picture. BTC perpetual funding rates are nearing 30%, while open interest has surged past $43 billion — territory last seen when bitcoin crossed $100,000 in January. This aggressive leverage has sparked memories of February’s $2 billion liquidation event, raising red flags about potential volatility.
“Froth is building,” QCP Capital warned.
Bitcoin Outperforms Luxury Watches
Bitcoin has delivered a year-to-date gain of 27.87% and is up 13.22% in the past month alone, leaving the luxury watch market trailing with a modest 4.5% rebound in Q2, according to a joint report from Morgan Stanley and WatchCharts.
Gains in the luxury watch sector were mostly concentrated in iconic models such as the Daytona, Nautilus, and Royal Oak, while brands like Panerai, Breitling, and IWC saw softer demand. Watches priced below $5,000 continue to see high inventory levels and slow sales turnover.
“The price recovery remains narrow and concentrated,” the report observed, citing a resurgence of interest from high-end collectors and a better global risk environment.
Historically, bitcoin and luxury watches have both flourished during times of monetary easing and wealth growth. However, the speculative flows have increasingly shifted toward bitcoin, thanks to institutional adoption and round-the-clock liquidity.
The pandemic-era link between bitcoin and luxury watches, both lifted by easy money and speculative fervor, faded after U.S. spot bitcoin ETFs launched in late 2023. Since then, bitcoin has evolved into a macro-sensitive, institutional asset, while luxury watches have returned to their role as aspirational fashion pieces.
Market Snapshot
- BTC: Bitcoin climbed close to $123,000 before retreating slightly. Crypto-related equities posted moderate gains. Analysts remain confident the crypto bull run has further to go, with some forecasting bitcoin’s $2.5 trillion market cap could eventually approach gold’s $22 trillion.
- ETH: Ether spiked above $3,079 early in Monday trading, then pulled back to around $3,011 while maintaining strong support above the $3,000 mark, forming a classic breakout-retest setup.
- Gold: Gold eased 0.1% after reaching a three-week high amid renewed trade tensions under President Trump and market focus on upcoming U.S. economic data. Silver surged to its highest level since September 2011.
- Nikkei 225: Asia-Pacific markets opened mixed on Tuesday, with investors shifting attention toward key economic releases from China. Japan’s Nikkei 225 finished flat.
- S&P 500: RBC Capital Markets boosted its 2025 S&P 500 target to 6,250 from 5,730. However, unlike Goldman Sachs and Bank of America, RBC sees limited upside from current levels, given the index already surpassed 6,280 as of July 11.
