Recent buying activity in the bitcoin market is driving prices upward, as traders are increasingly willing to pay a premium for futures contracts, indicating expectations of further price increases. Analysts note that this trend follows last week’s release of softer U.S. Consumer Price Index (CPI) data for April.

Zerocap analysts highlighted this development in a Monday market report, stating, "We see fundamental order flow driving the market higher, with the bitcoin three-month annualized basis having shot above 10% over the weekend, and perpetual funding rates are on the rise, showing that the market is building positive sentiment."

Data from Velo Data charts corroborate these observations, showing a significant increase in bitcoin's basis rate, now ranging between 9% and 12%. This uptick began after the CPI data release on May 15, which showed lower-than-expected inflation for April.

The bitcoin three-month annualized basis—a measure of the premium for futures contracts over the current price—has risen across various derivatives exchanges. On Deribit, the basis increased to 11.4%, on Binance to 10.47%, and on OKX to 9.68%. These increases reflect a strong market response to the inflation data.

QCP Capital analysts also noted a rally in the cryptocurrency market following the CPI release. They pointed out that bitcoin has been trading above $66,000, supported by positive inflows in ETF data, with Grayscale Bitcoin Trust (GBTC) recording net inflows last Friday.

Since the release of the cooler U.S. inflation data, bitcoin has maintained levels mostly above $66,000. The softer inflation data has provided a catalyst for broader market optimism, with all three major U.S. equity indexes reaching all-time highs last week. Lower inflation reduces the likelihood of prolonged high interest rates, which in turn lowers the cost of money and boosts investor interest in riskier assets like cryptocurrencies.

This positive market sentiment has continued into this week's trading, with global markets maintaining the momentum from the latter part of last week. European and UK equity indices showed gains in morning trading. London's FTSE 100 rose by 5.97 points to 8,426.23, a 0.071% increase. The Stoxx 600 index in Europe was up 0.22% to 524.10. In Asia, Tokyo's Nikkei 225 climbed by 0.73% to 39,069.68, Australia's S&P/ASX 200 increased by 0.63% to 7,863.70, and South Korea's Kospi rose by 0.64% to 2,742.14. U.S. stock futures also showed positive movement, with the NYSE Composite up by 0.39% in pre-market trading.

Despite the optimistic market environment, Zerocap analysts warned of potential risks. They pointed out the threat of underlying inflation spikes combined with low economic growth, posing a challenging scenario for the U.S. Federal Reserve and other central banks. "This is a risky situation for the U.S. Federal Reserve and other Central Banks, but for now markets seem to be winding up for a move higher," they added.

Zerocap also disclosed that its analysts might hold interests in the assets mentioned in their report.

As of 8:34 a.m. ET on Monday, bitcoin traded flat at $67,029, according to The Block's Prices Page. The GM 30 Index, which represents the top 30 cryptocurrencies, increased by 0.18% to 135.66 over the past 24 hours, reflecting ongoing positive sentiment in the broader cryptocurrency market.