The bitcoin market has witnessed a surge in buying activity, driving prices upward as traders increasingly demonstrate a willingness to pay a premium for futures contracts, indicating expectations of further price increases. This trend follows the release of softer U.S. Consumer Price Index (CPI) data for April, which has instilled optimism in the market.

Analysts at Zerocap highlighted this development in a recent market report, noting that fundamental order flow is driving the market higher. They pointed out that the bitcoin three-month annualized basis has surpassed 10%, and perpetual funding rates are on the rise, indicating a build-up of positive sentiment in the market.

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 revealed 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, with traders increasingly willing to pay a premium for futures contracts.

Analysts at QCP Capital 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 softer U.S. inflation data, bitcoin has maintained levels mostly above $66,000. The lower 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, while Asian markets also experienced an uptick. 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. However, for now, markets seem to be gearing up for a move higher.