What’s Driving Bitcoin’s “Crazy” Rally to $71,000


Bitcoin again to meet the “surge”. During the day, the price of bitcoin exceeded $71,000, hitting a new record high. As of 20:00, bitcoin’s latest quote was $71,530, up 2.7% on the day.

Three record-breaking in a week, and among the world’s eighth largest assets by market capitalisation, the value of bitcoin is also increasingly recognised with this wave of gains. In the view of analysts, the price of bitcoin may experience sharp fluctuations in the short term, and at the same time, understanding bitcoin’s position in digital assets, as well as the deeper logic of the relationship between digital assets and the digital economy, is of great significance for investment decisions and market analysis.

In the past month, Bitcoin has been on a wave of upward movement, hitting new all-time highs several times. Going forward, Bitcoin had hit a record of $68,999.99 per coin in November 2021. And since February 28, just half a month, bitcoin has broken through 60,000, 67,000 U.S. dollars mark, in the evening of March 5 broke through 69,000 U.S. dollars, the first time to hit a new all-time high. the evening of March 8, bitcoin intraday breakthrough 70,000 U.S. dollars.

Three times in a week to set a new record, bitcoin’s “crazy” by what factors to promote? The market generally believe that the “halving” is an important factor to promote the price of bitcoin.

“The halving, which halves the reward for producing new blocks, occurs about every four years and reduces the supply of bitcoins. A new round of “halving” will take place in April, and it is expected that on 23 April 2024, block rewards will drop from 6.25 to 3.125 (BTC).

Another key will be the issuance of the Bitcoin ETF. on 11 January 2024, the SEC formally approved the listing of the Bitcoin ETF for trading, with volume reaching $4.6 billion on the first day, and thus kicking off the surge in the trading price of cryptocurrencies, including Bitcoin.

“The SEC’s approval of the Bitcoin Spot ETF is undoubtedly a major milestone, which opens the door to digital assets for investors within the traditional financial system, bringing about a huge inflow of capital and a boost in market confidence.” Yu Jianing, co-chairman of the Blockchain Specialised Committee of the China Communications Industry Association and honorary chairman of the Hong Kong Blockchain Association, told Beijing Business News.

As of 8 March, BlackRock IBIT held 197,943 bitcoins worth more than $13.5 billion, according to the data. Yu noted that institutional investors usually adopt long-term investment strategies, and their participation reduces market volatility and improves market stability. The increase in institutional demand also suggests that more and more professional investors are beginning to recognise the value of Bitcoin in their asset allocation, especially in the current economic climate, where investors seek assets that hedge against the risk of inflation and currency devaluation.

Currently, a steady stream of funds is pouring into bitcoin spot ETFs issued by heavyweight investment firms such as BlackRock and Fidelity Investments, and, taken together, the net inflow of nearly $8 billion in less than two months, along with the halving of bitcoin, has triggered a bullish sentiment in the market.

What’s Driving Bitcoin’s “Crazy” Rally to $71,000

Yu also suggests that bitcoin bull markets tend to break out of all-time highs before entering a stronger upward phase. For example, in the last round of the bull market, bitcoin did see greater upside after breaking through its 2017 high of $19,891, with the price eventually reaching a high of $69,000. This move exemplifies a key feature of Bitcoin’s price dynamics: once it breaks above important psychological and technical resistance levels, market sentiment tends to shift to extreme optimism, triggering a new buying frenzy. Market participants tend to increase their positions after bitcoin breaks above key resistance levels in anticipation of new all-time highs. This expectation is further amplified by the addition of new market participants who do not want to miss out on the upswing, which pushes the price higher.

It is worth noting that as recently as 11 March, Bitcoin’s market capitalisation had risen to $1.398 trillion, surpassing silver’s $1.379 trillion market capitalisation to rank as the eighth largest asset in the world by market capitalisation. In addition, ethereum also surpassed the $4,000 mark for the first time since December 2021, accumulating more than 70 per cent during the year.

The news has fuelled even more market recognition and optimism for cryptocurrencies. “Bitcoin’s rise to the status of the world’s eighth largest asset signals its maturity in the investment and store of value space.” Yu Jianing said. This achievement reflects the market’s enhanced confidence in Bitcoin and its technology, and signals the digital asset space’s move from an early speculative phase to a steady growth that has attracted the attention of a wide range of investors and institutions. The rise of Bitcoin as an important asset class has forced the financial community and investors to reassess its role in the modern economy and financial system, triggering a rethinking of traditional financial assets.

As the founder of Digital Asset Bank stated, “Bitcoin’s all-time high marks a turning point for cryptocurrencies. Where traditional institutions once ‘stood on the sidelines,’ today they are here in full force as the main driver of the bull market.”

Bitcoin’s surge shows no sign of slowing down yet, as “good news” to stimulate the market has arrived. The London Stock Exchange announced on 11 March that it will begin accepting applications for bitcoin and ethereum ETNs in the second quarter of 2024, with the exact date to be announced “in due course”.

With multiple signals, does Bitcoin have further upside? How will it go in the future? Digital assets, including Bitcoin, can be considered a “future asset” whose value is able to effectively traverse economic cycles. Digital assets can be understood as a mirror of the development of the digital economy, just as the stock market reflects the relationship between the real industry, the revaluation of digital assets reflects the development and prosperity of the digital economy. However, as a highly volatile asset, the price of bitcoin may experience sharp fluctuations in the short term, which largely depends on market sentiment, the macroeconomic environment, regulatory policy and other factors.

The volatility of Bitcoin’s price is part of its intrinsic nature, and any investment decision should be based on adequate market research and personal risk tolerance. Understanding Bitcoin’s position in digital assets and the deeper logic of the relationship between digital assets and the digital economy is important for investment decisions and market analysis.

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