Reasons for Bitcoin's rise$BTC
Macroeconomic factors
• Monetary policy: Central banks around the world implement loose monetary policies, such as interest rate cuts and quantitative easing, which will make the market more liquid and investors' risk appetite rise, thus investing funds in alternative assets such as Bitcoin, pushing up their prices.
• Economic cycle: When the economy is booming, investors are confident and will use Bitcoin as an alternative investment channel; when the economy is in recession or there is strong uncertainty, Bitcoin will also attract investors due to its safe-haven properties, which will in turn drive up prices.
• Inflation expectations: The total amount of Bitcoin is limited, and it is scarce like gold. When the market expects inflation to rise, investors will increase their Bitcoin allocation to preserve and increase their value, pushing up its price.
Market supply and demand factors
• Supply reduction: The increasing difficulty of Bitcoin mining and the halving of block rewards will reduce the market supply, while the demand continues to increase. The imbalance between supply and demand drives up prices.
• Institutional demand: Large-scale purchases of Bitcoin by institutional investors will not only increase market demand, but will also drive other investors to follow suit, forming a "herd effect" that drives prices upward.
• Increased user acceptance: As Bitcoin awareness and acceptance increases, the user base expands, payment scenarios broaden, and well-known companies accept Bitcoin payments, all of which can stimulate market enthusiasm and drive prices up.
Technical and sentiment factors
• Technological development: The development of blockchain technology and the implementation of Bitcoin-related applications, such as Layer 2 expansion solutions and cross-chain interoperability technologies, will enhance the actual utility and intrinsic value of Bitcoin, thereby boosting prices.
• Market sentiment: When the market is optimistic, investors tend to ignore risks and buy a large amount of Bitcoin, which can easily push up its price excessively.
• Breakthrough of key level: When Bitcoin breaks through the key resistance level at the technical analysis level, it will attract more traders to enter the market, forming new buying orders and further pushing up the price.
Policy and regulatory factors
• Regulatory relaxation: If the government becomes more tolerant or clear about its regulatory stance on cryptocurrencies, or approves Bitcoin-related financial products such as Bitcoin ETFs, it will enhance market confidence, improve market accessibility and liquidity, and drive up Bitcoin prices.
• Official recognition: Events such as Trump’s announcement that he would list Bitcoin as a strategic reserve asset of the United States if he returns to the White House have increased the recognition of Bitcoin as a legitimate asset, thereby driving up its price.
