Bitcoin's Meteoric Rise: Key Influencing Factors Unveiled
Influencing factors
Growing institutional interest One of the key factors that influenced the rise of Bitcoin was related to the news of increasing institutional participation in the cryptocurrency market. For example, the news that Wintermute will become a liquidity provider for the Bitcoin ETF and Ethereum ETF in Hong Kong reflected the growing interest in these assets and contributed to the strengthening of Bitcoin's market position. Against the backdrop of such news about new financial products, demand for Bitcoin continues to grow, which leads to an increase in its price. The influence of regulators Political uncertainty and regulatory actions also have a significant impact on the cryptocurrency market. For example, US President Joe Biden's plan to "veto a bill to strip the SEC of its authority to regulate cryptocurrencies" has increased market participants' fears about further tightening of regulation. Despite the growth of the Bitcoin price in the first half of the year, this factor led to a short-term decrease in interest in the asset, which was reflected in a decrease in market capitalization and an increase in volatility. Analyst forecasts and the influence of macroeconomic factors Analyst forecasts also played an important role in changing investor sentiment. For example, Glassnode analysts predicted that Bitcoin could reach $85,200 before the summer of 2024 if the technical setup played out. This forecast, along with the growth of institutional investment, helped strengthen Bitcoin’s position and maintain its positive momentum. Stability and Volatility Factors Another important point was that Bitcoin’s key indicator indicated a period of calm in the market. The decline in the volatility premium signaled a decrease in market uncertainty, which attracted more conservative investors and provided additional demand for the asset. However, this also set the stage for the subsequent correction that was observed throughout 2024. FTX Recovery and Market Impact The news that almost all FTX creditors will receive their funds back also contributed to the improvement in sentiment in the crypto market. Confidence that investors’ funds would be returned reduced the level of uncertainty and increased confidence in the crypto market as a whole, which contributed to the growth of Bitcoin’s value and its capitalization.