Bitcoin Surges 27.87% Year-to-Date, Outpacing Luxury Watches

Bitcoin continues to break records, trading near $119,500, with significant institutional inflows in the U.S. but outflows in Germany. This regional disparity highlights a growing divergence in global institutional sentiment towards Bitcoin. According to a recent report, U.S.-listed funds dominated with $3.74 billion in inflows, while Germany saw $85.7 million in outflows.

Vanguard, once skeptical of Bitcoin, has become a major holder through its investment in MicroStrategy. Despite once branding Bitcoin as an "immature asset class," the $10 trillion asset manager is now Michael Saylor's MicroStrategy's largest shareholder, indirectly becoming the most significant Bitcoin holder in traditional finance.

QCP Capital highlights in a recent note that institutional enthusiasm remains notably robust, exemplified by over $2 billion net inflows into spot BTC ETFs last week. However, derivatives markets suggest a more nuanced approach. Leveraged long positions are expanding aggressively, with perpetual funding rates approaching an elevated 30% and open interest surpassing $43 billion, levels unseen since BTC reclaimed $100k in January. Such aggressive positioning raises caution flags, recalling February's abrupt $2 billion liquidation event. “Froth is building,” QCP warns.

Bitcoin's performance outpaces luxury watches, driven by institutional interest and macroeconomic factors. Bitcoin is up 27.87% year-to-date and 13.22% in the past month, easily outperforming the luxury watch market’s modest +4.5% rebound in Q2. Gains were concentrated in flagship models, Daytona, Nautilus, Royal Oak, while brands like Panerai, Breitling, and IWC underperformed. Inventory for watches under $5,000 remains historically elevated, and dealer turnover in that range continues to lag. “Price recovery remains narrow and concentrated,” the report notes, driven by “renewed interest from high-end collectors and improved global risk appetite.”

Both Bitcoin and watches tend to benefit from “expansionary monetary environments and periods of wealth creation.” However, the speculative capital isn’t flowing evenly. Bitcoin has attracted more of the macro-driven bid, with institutional inflows and 24/7 liquidity making it the preferred high-beta asset. The pandemic-era correlation between Bitcoin and watches, both beneficiaries of easy money and speculative excess, broke down in late 2023 with the approval of U.S. spot Bitcoin ETFs. Bitcoin has since matured into a macro-sensitive, institutionally backed asset, while watches have returned to their roots: fashion.