The price of Bitcoin (BTC) reached $111,880 on May 21, 2025, setting a new all-time high, which is not surprising. Here are the specific reasons:
Changes in market supply and demand relationship
- Expected decrease in supply: The total supply of Bitcoin is limited, and its supply gradually decreases over time. As the Bitcoin network develops, more and more Bitcoins are mined, but the mining difficulty is also constantly increasing, leading to a gradual slowdown in the production speed of new Bitcoins. This expectation of reduced supply makes Bitcoin more scarce in the market, thus driving up the price.
- Increased demand: On one hand, as the cryptocurrency market continues to develop and mature, more and more investors are beginning to pay attention to Bitcoin and consider it as an investment asset. The influx of institutional investors has brought a large amount of capital to the Bitcoin market, driving up the price. On the other hand, some countries and regions are gradually relaxing their regulatory attitudes towards Bitcoin, which has enhanced the legitimacy and security of Bitcoin to a certain extent, further stimulating market demand.
Technological development and application expansion
- Widespread application of blockchain technology: As the first application case of blockchain technology, Bitcoin's success has laid the foundation for the development of blockchain technology. With the widespread application of blockchain technology in various fields such as finance, supply chain, and the Internet of Things, the value of Bitcoin has also been further enhanced. For example, some companies have begun to use blockchain technology for cross-border payments and settlements, and Bitcoin, as a decentralized digital currency, has the advantages of speed and low cost, making it favored by some enterprises.
- Continuous improvement of Bitcoin technology: The Bitcoin network is also continuously undergoing technological improvements and upgrades to enhance transaction speed and security. For example, the emergence of the Lightning Network has significantly improved the transaction speed of Bitcoin while also reducing transaction costs. These technological advancements make Bitcoin more convenient and efficient in practical applications, thus driving up its price.
Market sentiment and investor confidence
- Market optimism driving prices: The optimistic sentiment in the Bitcoin market has, to some extent, driven up prices. As Bitcoin prices continue to rise, investor expectations also increase, and this optimistic sentiment further attracts more investors into the market, creating a positive feedback mechanism. Additionally, positive evaluations and investments in Bitcoin by some well-known individuals and institutions have also boosted investor confidence.
- Recognition of long-term investment value: More and more investors are beginning to recognize the long-term investment value of Bitcoin. As a decentralized digital currency, Bitcoin has characteristics such as anti-inflation and value preservation. In the current context of unstable global economic conditions and significant inflationary pressures, these characteristics make Bitcoin an attractive investment asset.
Macroeconomic environment factors
- Uncertainty in the global economic situation: Currently, the global economic situation faces many uncertainties, such as trade frictions and geopolitical tensions. In this context, investors often seek safe-haven assets, and Bitcoin, as a decentralized digital currency, has certain safe-haven properties. Therefore, when the global economic situation is unstable, investors will increase their allocation to Bitcoin, thus driving up its price.
- Impact of monetary policy: The monetary policies of central banks in various countries also have a certain impact on Bitcoin prices. For example, some central banks have adopted loose monetary policies, leading to an increase in the money supply and rising inflationary pressures. In this context, Bitcoin, as a non-sovereign currency, has anti-inflation characteristics that make it an attractive investment option.