Last Monday, Bitcoin officially set a new peak by surpassing the 120,000 USD threshold, recording a record price of 120,290 USD. The largest cryptocurrency in the world rose more than 1% just at the beginning of the trading session and has increased nearly 15% over the past month. This strong rally coincides with the U.S. House of Representatives preparing to enter 'Crypto Week' – a series of debates on bills that could reshape the legal framework for the cryptocurrency industry.

Key Factors Driving Bitcoin to New Heights

According to analysts interviewed by ABC News, there are three main reasons for this price increase:

  1. More favorable legal environment in the U.S.

    The emergence of many bills considered friendly to the cryptocurrency industry, notably the GENIUS Act, has created optimism in the market. This bill aims to establish a legal framework for stablecoins – a type of cryptocurrency pegged to a fixed asset like the U.S. dollar. Lawmakers are also considering measures to clearly define the federal stance on crypto, as well as proposing to ban the Federal Reserve (Fed) from issuing its own digital currency.

  2. The rise of investment through Bitcoin ETF funds

    The U.S. approval of Bitcoin ETF funds since 2023 has paved the way for a large wave of investment from traditional financial institutions. Corporations such as Fidelity or Franklin TempletonCurrently, all provide Bitcoin ETF products, helping investors access the market without needing to directly buy and store coins. Recently, the inflow of money into Bitcoin ETF funds has reached a record high: over 1 billion USD per day, and the total assets of these funds exceeded 158 billion USD, according to data from The Block.

  3. Scarcity of Bitcoin supply

    Bitcoin's deflationary mechanism – with a total supply limited to 21 million BTC – is also believed to be a factor driving prices as demand increasingly outstrips supply. However, some experts argue that this has long been 'priced in' and is not necessarily the direct cause of the recent surge.

The Impact of Politics and Trump Administration

Another important factor is the shift in the political stance of the U.S. since Donald Trump's victory in the November presidential election. Bitcoin's price has increased nearly 80% since then. Analysts believe the Trump administration is taking a more open stance towards the crypto market, contributing to expectations of a friendly policy environment in the future.

However, there are also concerns regarding conflicts of interest as Trump himself has direct ties to the crypto industry. Specifically, the company he supports – World Liberty Financial – issued the USD1 stablecoin in March. Recently, an investment fund in Abu Dhabi used USD1 to inject 2 billion USD into the Binance exchange, providing potential profits for Trump's business. However, Trump denies any wrongdoing and the White House asserts that his assets have been placed into a trust managed by his sons.

The Crypto Market Boom

Not only Bitcoin, other cryptocurrencies are also benefiting from the current wave of optimism. Ether (ETH) – the second-largest coin – rose 1% on Monday. Solana (SOL) increased by 2%. According to Professor Nikhil Bhatia from the University of Southern California, the preparation for the approval of the Bitcoin ETF in the fall of 2023 has triggered a new bull cycle, bringing Bitcoin back into 'bull market' status.

However, not everyone is entirely optimistic. Some researchers believe that the cryptocurrency market still carries many unpredictable factors due to the lack of intrinsic value like stocks. The price of Bitcoin largely depends on investor sentiment and capital flows. Professor Bryan Routledge from Carnegie Mellon University commented:

"The price of Bitcoin is always unpredictable. The big question is: 'Why is it rising right now?' No one can say for sure."

Summary

Bitcoin is leveraging political, legal, and investment capital factors to establish new milestones. However, as is often the case with the cryptocurrency market, risks and volatility always lurk behind each strong price increase. Investors need to continue closely monitoring legal developments in the U.S. during 'Crypto Week' as well as subsequent actions from the Trump administration to make informed investment decisions.