After two months, Bitcoin once again reached the $71,000 mark.

On the morning of May 21, Beijing time, the price of Bitcoin continued to rise, breaking through the $70,000 mark for the first time in more than a month, reaching a high of $71,650, with a maximum increase of 8.2% in 24 hours. As of 16:30 on May 21, the price of Bitcoin rose to $70,959, up more than 6% on the day.

This surge in Bitcoin prices is related to multiple factors such as the approval of the spot Ethereum ETF, the inflow of funds into the digital asset market, and the rise in gold prices. But at the same time, the price trend of the currency cannot get rid of the "cyclical" financial law after all, and will be affected by geopolitical disturbances, the Federal Reserve's monetary policy and expectations of interest rate cuts.

In addition to Bitcoin, on May 21, Ethereum soared nearly 20%, and the price came to above $3,700. The rest of the virtual currencies also rose across the board, including Binance Coin, Dogecoin, STETH Coin, etc., all of which rose by 6% to 20%. As of 16:00, the price of Ethereum was $3,659, the largest increase among the major virtual currencies.

Earlier in mid-March, the price of Bitcoin broke through the $73,000 mark, setting a record high. At that time, affected by the inflow of funds into the Bitcoin spot ETF market and the upcoming "halving" event in April, the price of Bitcoin continued to rise. After that, Bitcoin experienced a "roller coaster" fluctuation. In early May, due to the change in the US inflation situation and the weakening of the Fed's interest rate cut expectations, it once fell below $60,000.

With the influence of multiple macro factors, this situation has now changed.

In the view of many analysts, this surge in Bitcoin is precisely affected by the rise in Ethereum prices. On the news, some analysts speculate that the US Securities and Exchange Commission is likely to approve the spot Ethereum ETF this week. Bloomberg ETF analysts raised the approval probability from 25% to 75%, significantly boosting market confidence.

"From the example of the approval of the Bitcoin spot ETF, it can be seen that the approval of the Ethereum ETF will provide investors with a more direct and compliant investment channel. If the Ethereum ETF can also be passed, it is likely to attract more funds to flow into the digital asset market." Yu Jianing, co-chairman of the Blockchain Committee of the China Communications Industry Association and honorary chairman of the Hong Kong Blockchain Association, explained.

On the other hand, the supply dynamics of the digital asset market also have an impact on prices.Since the market supply of digital assets is relatively limited, their prices naturally rise as demand increases. Yu Jianing said that some large institutional investors and asset management companies, such as ARK, 21Shares, Hashdex, InvescoGalaxy, BlackRock and Fidelity, are waiting for the SEC's decision on their application for spot Ethereum ETFs, which shows that the market expects more institutional funds to enter, further pushing up prices.

Risks and unknowns also come with it. We can see the risks under limited conditions, but we cannot ignore the unknown risks. Geopolitical tensions still pose a disturbance to global financial markets. If geopolitical uncertainty leads to a global economic slowdown, Bitcoin may also face downward pressure as investors may withdraw funds to avoid risks. The Federal Reserve's monetary policy also has an important impact on Bitcoin prices!

If the market expects the Federal Reserve to cut interest rates, this will generally lead to a depreciation of the US dollar, which may increase investors' interest in non-traditional assets such as Bitcoin; interest rate cuts may also increase market liquidity and provide more funds to the Bitcoin market, which may have a positive impact on prices. As the digital asset market matures, regulators may introduce more clear policies and regulations. A more stable and predictable regulatory environment may attract more institutional investors to the market, thereby increasing the demand for Bitcoin. On the contrary, if regulatory policies become too strict, it may inhibit market growth and even lead to price declines.

In the face of volatility in the digital asset market, investors should see the high risks behind high volatility. "Digital assets are still riskier investment assets. The rise and fall of asset prices and the speed are significantly different from traditional assets. It is important to adopt appropriate risk management strategies. At the same time, a diversified investment portfolio can reduce the risk of a single asset. A long-term perspective should be maintained to avoid impulsive decisions due to short-term market fluctuations.