Recent activity in the bitcoin market has spurred an upward trajectory in prices, with traders displaying a willingness to pay premiums for futures contracts, signaling expectations of further price appreciation. This surge in buying activity follows the release of softer U.S. Consumer Price Index (CPI) data for April, a development that has garnered attention from analysts and market observers alike.

Analysts at Zerocap highlighted the fundamental order flow driving the market higher, noting the bitcoin three-month annualized basis exceeding 10% over the weekend. Concurrently, perpetual funding rates are on the rise, indicating a growing positive sentiment within the market. These observations align with data from Velo Data charts, which illustrate a notable increase in bitcoin's basis rate, currently fluctuating between 9% and 12%, following the release of the CPI data on May 15.

The surge in the bitcoin three-month annualized basis, a metric gauging the premium for futures contracts relative to the current price, has been evident across various derivatives exchanges. Deribit, Binance, and OKX have all witnessed an uptick in the basis rate, with figures reaching 11.4%, 10.47%, and 9.68%, respectively. These spikes underscore the market's positive response to the inflation data and the growing optimism among traders and investors.

QCP Capital analysts have also observed a rally in the cryptocurrency market post the CPI release, with bitcoin maintaining levels above $66,000. Positive inflows in ETF data, particularly in Grayscale Bitcoin Trust (GBTC) net inflows, have further supported bitcoin's price momentum. The softer inflation figures have acted as a catalyst for broader market confidence, with U.S. equity indexes reaching record highs last week, buoyed by the prospect of reduced inflation pressures and interest rates.

Amidst the prevailing positive sentiment, global markets have sustained their momentum into the current week's trading sessions. European and UK equity indices have shown gains in morning trading, with London's FTSE 100, the Stoxx 600 index in Europe, and Asian indices like Tokyo's Nikkei 225, Australia's S&P/ASX 200, and South Korea's Kospi all registering upward movements. U.S. stock futures have also indicated positive trends, with the NYSE Composite showing gains in pre-market trading, reflecting the overall optimism in the market environment.

Despite the optimistic outlook, Zerocap analysts have cautioned against potential risks, highlighting concerns over underlying inflation spikes coupled with sluggish economic growth. This scenario poses a complex challenge for the U.S. Federal Reserve and other central banks, necessitating a delicate balance between managing inflationary pressures and supporting economic recovery. While acknowledging the risks, the analysts noted the current market sentiment appears poised for further upward movement, albeit with a watchful eye on potential challenges ahead.

Zerocap has also disclosed potential interests held by its analysts in the assets discussed in their report. As of 8:34 a.m. ET on Monday, bitcoin was trading flat at $67,029, as per The Block's Prices Page. The GM 30 Index, representing the top 30 cryptocurrencies, saw a modest increase of 0.18% to 135.66 over the past 24 hours, reflecting the ongoing positive sentiment prevailing in the broader cryptocurrency market.