Bitcoin’s recent surge to new highs is occurring amid significant economic challenges, according to a report from ARK Invest, led by Cathie Wood.
In May, Bitcoin rose by 11.1%, outperforming gold and breaking key resistance levels. This increase coincided with notable stress in the U.S. housing and auto sectors, traditionally key indicators of consumer strength.
In housing, sellers have vastly outnumbered buyers. ARK attributes this to the Federal Reserve’s aggressive interest rate hikes since 2022, which have reduced affordability and increased pressure on home prices, the largest contributor to household net worth. Meanwhile, auto sales fell sharply in May to 15.6 million units, down from over 17 million the previous month after an early-year surge driven by tariff concerns.
As these sectors soften, Bitcoin is attracting capital seeking yield and stability. Spot Bitcoin ETFs saw inflows of $5.5 billion in May, over three times the inflows to gold ETFs, which declined sharply during the same period.
ARK emphasized that Bitcoin’s rally does not yet show signs of speculative frenzy. Profit-taking remains moderate, and unrealized gains are significantly below levels observed in previous market bubbles.
For investors moving away from pressured traditional assets, Bitcoin appears to be a deliberate portfolio shift rather than a speculative gamble amid the changing economic environment.