Why is Bitcoin going up?

In recent months, Bitcoin has been making headlines again, with its price surging to new heights and capturing the attention of investors worldwide. But why is Bitcoin going up? This question has become more prevalent as factors like economic shifts, technological advancements, and increased institutional interest have aligned to drive the cryptocurrency’s value. Understanding these elements is crucial for investors, as Bitcoin’s volatility and unique position in the financial world make it both an exciting and risky asset. This article will explore the reasons behind Bitcoin’s upward trend and what it means for those looking to invest.

1. Market Optimism Post-Election

This is because the recent U.S. presidential election highly impacted the value of Bitcoin in the last year. After President Donald Trump was re-elected, the price of BT ICO rose to a record level of nearly $90,000. Most of the rally is associated with anticipating more friendly regulation towards cryptocurrency.

While campaigning, Trump vowed to make America the leader in cryptocurrency use. To achieve this goal, he said he wanted to establish a national Bitcoin reserve and relax the restrictions regulating the crypto industry. These commitments have reinforced investors’ confidence in his favorable orientation towards digital assets.

Furthermore, the emerging market optimism due to the possibility of regulatory reforms under the new administration has also acted as an essential driver. Anticipated appointments of sympathetic regulators for crucial roles indicate the emerging signs of scientific and liberal policies toward the cryptocurrency business. The most critical factor expected to be restored is the regulatory direction, which will further explain the inclination of institutional investors towards the BTC and, thus, the buying pressure.

2. Approval of Bitcoin Exchange-Traded Funds (ETFs)

The approval of spot Bitcoin Exchange-Traded Funds (ETFs) has been a pivotal development in the cryptocurrency market, significantly influencing Bitcoin’s price trajectory.

Attracting Institutional Investors

Physical Bitcoin ETFs mean that investors can invest in Bitcoin, but they do not own the asset physically. Formerly, this structure has attracted institutional investors who might have been shy because of (custody and other regulations). Introducing these ETFs has brought in a regulated and known vehicle encouraging more institutional players.

Broadening Access for Retail Investors

In addition to institutional demand, Bitcoin ETFs have made it more convenient for ordinary individuals to invest in the cryptocurrency. As such, they can directly invest in Bitcoin through traditional stock exchanges without opening accounts in cryptocurrency exchanges or owning a digital wallet.

Impact on Bitcoin’s Price Movements

A favorable regulatory stand of approval of BEP20 Tokens and the subsequent launch of Bitcoin ETFs has been found to have boosted the Bitcoin price significantly. For instance, when the SEC approved multiple spot Bitcoin ETFs in January 2024, there was enforcement, with Bitcoin repeating higher to all-time high levels. This trend supports the viewpoint of the market approval towards the approaches that ETFs offer by making Bitcoin investment more accessible and legitimate.

3. Recent Bitcoin Halving Event

Found to have approved and subsequently launched BEP20 Tokens for Bitcoin ETF, a favorable regulatory stance has been identified to have significantly lifted the price of Bitcoin. For example, when multiple spot Bitcoin ETFs were approved by the SEC in January of 2024, there was enforcement, and Bitcoin moved higher to reach its all-time high again. This trend favors market approval of ETFs’ approaches to make Bitcoin investments more legitimate.

Understanding the Bitcoin Halving Mechanism

Bitcoin’s protocol has the mechanism of halving the reward about every four years and is based on blocks 210,000. This mechanism aims to reduce inflation since it helps adjust the result: miners are paid to add the new block to the chain. Historical Impact on Bitcoin’s Price

This points to the historical fact that all halving events have boosted the price of Bitcoin by a handsome amount. For example, after the second halving in 2012, the cost of Bitcoin increased from about $12 to about $1000 within the following year. As with the previous halving, the price rose from about $650 to nearly $20,000 by December 2017. Such patterns indicate that cutting supply and having heuristics or even growing demand leads to the growth of prices.

Investor Anticipation and Market Dynamics

Before the April 2024 halving, investors hoped to spot another price increase because it had previously happened. This anticipation paved the way to higher buying interest, which affected current fluctuations. Since the halving, the price of Bitcoin has skyrocketed, as observed in many other previous cycles.

4. Increased Institutional Adoption

The surge in Bitcoin’s value is significantly influenced by heightened institutional adoption, as major corporations and financial institutions increasingly invest in the cryptocurrency.

Recent Investments by Major Corporations and Financial Institutions

MicroStrategy Corporation, a business Intelligence firm, has significantly boosted its BTC stake. The common shares were issued in March 2019, with the company buying 3,700 bitcoins for $52 million in September 2019. In November 2024, it purchased 27,200 bitcoins for $2.03 billion, resulting in the company owning a stash of 279,420 bitcoins, which cost around $24 billion as of October 2021. Further, the assets invested in BlackRock’s iShares Bitcoin Trust (IBIT) have leapfrogged the assets invested in its original gold ETF, which tells a story of changing trends in investment.

Growing Acceptance of Bitcoin as a Legitimate Asset Class

Subsequently, the approval of spot Bitcoin ETFs has further established Bitcoin’s legitimacy as an asset class. Such financial products have received an influx, and even Bitcoin ETFs have experienced a net inflow of $1.114 billion in a single day, kindling an all-time high. This trend shows a rising accumulation of the leading cryptocurrency by institutional investors.

Influence on Retail Investor Sentiment

Praise of Bitcoin from financial institutions influences the belief in Bitcoin amongst retail investors. When Wall Street starts buying Bitcoins through identified funds, the everyday investor gets persuaded that venturing into cryptos is worthy due to their monetization possibilities; hence, people would invest.

5. Global Economic Factors

Bitcoin’s recent price surge is closely linked to various global economic factors, including inflation concerns, fiat currency devaluation, and broader financial market volatility.

Inflation Concerns and Fiat Currency Devaluation

Inflation rates have been on the rise, causing the purchasing power of fiat money to decline, thereby creating a need for people to invest in assets that will hold value. Thus, Bitcoin, with its limited supply of 21,000 000 coins, is much safer than using paper currency that easily undergoes inflation and devaluation. This scarcity makes it appealing as an option to standard, inflation-prone money that is in circulation today.

Hedge Against Financial Market Volatility

The fact that Bitcoin does not rely on any central banks for its operations makes it fit the potential hedge against the traditional financial markets’ volatility. That is why, in the moments of fluctuations in economic activity, investors are looking to make diversification investments in Bitcoin as an instrument different from typical financial assets.

Impact of Global Economic Policies and Events

Cryptocurrencies are closely connected to global economic policies and events. That is why the approval of the spot Bitcoin ETFs pushed institutional investors into buying Bitcoin, which has positively impacted its price volatility. Political instability and the policies that accompany it also make investors run towards Bitcoins, changing the market in the process.

6. Technological Developments and Network Growth

Bitcoin’s recent price surge has been significantly influenced by advancements in its underlying technology and infrastructure, increased adoption of transactions as a store of value, and the effects of network growth on scalability and security.

Advancements in Bitcoin’s Underlying Technology and Infrastructure

Some new technological improvements have further strengthened Bitcoin and made it more operational and practical. Using the Layer 2 solution called the Lightning Network has enhanced the transaction throughput and minimized the fee barrier. Furthermore, with the coming of Ordinals and Inscriptions, the possibility of establishing further functionalities of Bitcoin has been developed to allow for the production of NFTs and other assets.

Increase in Bitcoin Adoption for Transactions and as a Store of Value

The use of Bitcoin has expanded not only as currency but also as digital or virtual currency. Some large businesses and banks have adopted Bitcoin as a means of payment and as an investment, making it more reputable. For instance, Bitkey has developed a self-custody Bitcoin wallet through Block, Inc., enabling secure and easy transactions. The increased use of these practices has added to Bitcoin’s value and market significance.

Effect of Network Growth on Bitcoin’s Scalability and Security

With the growing ecosystem of Bitcoin, questions of scalability and security still come into debate. Sidechains, such as Fractal Bitcoin, are promoted as a scalable solution that does not compromise the safety and decentralization of the platform. Fractal Bitcoin also presents a novel merging mining technique called Cadence Mining that could act as an extra revenue source for miners and increase the number of transactions per second. Such changes are crucial to cater to the growing user base and rising Bitcoin transactions. Consequently, recent advances in technological infrastructure development and the growth of Bitcoin’s network have been fundamental to Bitcoin’s current price surge due to the currency being extended as both a payment medium and a store of value.

7. Media Influence and Public Perception

Media coverage and public perception are pivotal in shaping Bitcoin’s market dynamics.

Role of Media Coverage in Shaping Public Opinion and Investor Behavior

The raw material used in the analysis is the frequency of appearance of any information regarding Bitcoin, be it positive or negative, within extensive media coverage, which can shape public opinion and investors’ actions. Positive information increases people’s attention and entices them to invest, whereas negative information worries them. For instance, researchers have noted that sentiment analysis of media influences virtual currency, remarkably the price of Bitcoin.

Impact of Endorsements or Criticisms from High-Profile Individuals and Entities

Opinions from the entertainment industry and others can positively or negatively influence Bitcoin prices. For instance, approvals have been associated with higher acceptability and prices, while rejection results in a declined market.

Social Media Trends and Their Correlation with Bitcoin’s Price Volatility

People use Facebook and other social media accounts as a point of reference for Bitcoin because trends are usually associated with pricing fluctuations. Market sentiment can thus be highly volatile when an event – such as a viral post, hashtag, or online community – is ignited. Several studies have also pointed out that ‘tweets,’ activity on social media sites, can be used to forecast changes in the Bitcoin price, meaning social media activity impacts the markets.