Bitcoin has rebounded significantly this month and its price has continued to rise, reigniting widespread concern and discussion in the market. As the leader in the cryptocurrency market, fluctuations in Bitcoin prices tend to drive the trend of the entire crypto market, and this rebound is driven by a variety of factors, including changes in the macroeconomic environment, the impact of Bitcoin halving expectations, large-scale The admission of institutional investors, the recovery of market sentiment and the benefits brought by technological innovation.
1. Changes in the macroeconomic environment
Changes in the macroeconomic environment have laid the foundation for Bitcoin's rebound. In the past year, the global economy has faced multiple challenges, especially high inflation and the central bank's continued interest rate hikes, which have had a huge impact on the financial market. In order to cope with inflationary pressure, the Federal Reserve has continued to raise interest rates, resulting in tighter liquidity in the global financial market and pressure on risky assets, and Bitcoin has not been spared. However, as inflation is gradually brought under control, the market has begun to expect that the Federal Reserve's tight monetary policy will gradually slow down, and may even enter a cycle of interest rate cuts in the next few years.
Changes in interest rate expectations directly affect investors' risk appetite. As the Fed's signal of slowing interest rate hikes becomes clearer, risk aversion in the global capital market begins to cool, and investors' interest in risky assets rebounds. As a non-traditional asset with risk-averse properties, Bitcoin has attracted a large amount of capital inflows again against the backdrop of slowing inflation expectations and the return of liquidity.
In addition, the instability of the global geopolitical situation has also driven the increase in demand for Bitcoin. In particular, the political uncertainty and financial turmoil in some countries have prompted some investors and the public to view Bitcoin as a tool for wealth preservation and capital hedging, thereby driving up prices.
2. Bitcoin halving expectations
Bitcoin is about to usher in its fourth "halving" event in 2024, an important milestone in the Bitcoin market every four years. The so-called "halving" means that after every 210,000 blocks of the Bitcoin blockchain network are generated, the Bitcoin reward received by miners is halved until all Bitcoins are mined. The main impact of the halving is to reduce the supply of new Bitcoins, thereby exerting upward pressure on prices when the supply and demand relationship remains unchanged.
Historical data shows that the past few Bitcoin halving events have led to a sharp rise in prices. For example, after the halving events in 2016 and 2020, the price of Bitcoin experienced several times the growth. The market expects that the halving in 2024 will also have a similar impact on the price of Bitcoin. As a result, many investors entered the market in advance, driving the rise of Bitcoin this month.
The anticipation for this halving is particularly strong because the value of scarce assets is further highlighted against the backdrop of global economic turmoil. Bitcoin's deflationary nature is similar to traditional safe-haven assets such as gold, but its liquidity and global acceptance are higher, so investors are generally optimistic about the price increase opportunities brought about by the halving.
3. Entry of large institutional investors
The entry of large institutional investors is also one of the important factors driving Bitcoin's rebound this month. In recent years, as the cryptocurrency market has gradually matured, more and more traditional financial institutions have begun to get involved in this field. Especially this month, the news that Bitcoin ETF (Exchange Traded Fund) is about to be approved has attracted great attention from the market. Global well-known institutions including BlackRock and Fidelity are actively applying for Bitcoin spot ETF products. This trend is seen as an important sign that the cryptocurrency market is moving towards the mainstream.
The launch of ETFs will provide more traditional investors with a convenient channel to enter the crypto market, especially those institutional and individual investors who are unwilling to hold Bitcoin directly. The launch of ETF products will bring higher market liquidity and further drive up the price of Bitcoin. In addition, the entry of heavyweight institutions such as BlackRock has also enhanced market confidence, because the participation of these institutions not only brings financial support, but also means that the compliance and transparency of the crypto market will be improved.
4. Recovery of market sentiment
The recovery of market sentiment is also a key factor in this Bitcoin rebound. The cryptocurrency market is highly sentiment-driven, and changes in market sentiment often lead to large price fluctuations. In the crypto winter of 2022, investor confidence hit rock bottom due to the collapse of a series of crypto projects and increased regulatory pressure. However, as the market gradually digested these negative factors, investor sentiment began to turn optimistic.
In particular, the combined effect of large institutional investors entering the market and the expected Bitcoin halving has prompted investors to re-optimize the future of the crypto market. The improvement in market sentiment is not only reflected in the return of retail investors, but also in the increased activity in innovative fields such as decentralized finance (DeFi) and NFT. The innovation and application of these emerging fields have brought new vitality to the market, attracting more funds and users to enter Bitcoin and the entire crypto market.
5. Promotion of Technological Innovation
Technological innovation has always been one of the important driving forces behind the development of Bitcoin and the crypto market. Although the Bitcoin protocol itself is relatively stable, the technology ecosystem surrounding Bitcoin is constantly evolving. For example, the Lightning Network, a second-layer scaling solution for Bitcoin, has made significant progress in recent years. It can greatly increase the transaction speed and reduce transaction costs of the Bitcoin network, thus enhancing Bitcoin’s potential as an everyday payment tool.
In addition, the application scenarios of blockchain technology are also expanding, especially in the field of decentralized finance (DeFi), where the role of Bitcoin as a value storage tool has been further strengthened. Although Bitcoin is not as good as Ethereum in smart contract functions, its stability and security make it an important collateral asset in DeFi applications. These technological advances provide a solid foundation for the long-term growth of Bitcoin and enhance the market's confidence in its future performance.
VI. Potential risks and challenges
Despite Bitcoin's strong performance this month, the market still faces many challenges. First, Bitcoin price volatility remains high, which is a major risk for short-term investors. Historical data shows that Bitcoin prices often experience large fluctuations, especially when market sentiment fluctuates greatly.
Secondly, global regulatory uncertainty still exists. Although the regulatory attitudes of major economies such as the United States towards Bitcoin have gradually become clear, in some other regions, regulatory policies are still unclear or even have strict restrictions. In addition, the compliance costs of the Bitcoin market may rise further in the future, affecting the operations of exchanges and investors.
Summarize
The rebound of Bitcoin this month was driven by multiple factors, including the improvement of the macroeconomic environment, the expectation of Bitcoin halving, the entry of institutional investors, the recovery of market sentiment, and the benefits brought by technological innovation. This round of rebound not only injected new vitality into the market, but also strengthened investors' confidence in the future of Bitcoin. However, as the market continues to develop, investors still need to pay attention to market volatility and potential regulatory risks while enjoying the benefits.
Market Analysis
From the daily level, since Bitcoin confirmed the upward trend of the daily level on September 17, it has closed positive lines for many consecutive days, and the short-term bullish trend continues. As can be seen from the figure, the price of Bitcoin has approached the recent pressure level of 65,000 US dollars. Therefore, it is very important whether the daily level closing line can stand above 65,000 US dollars today. If the daily level closing line stands above 65,000 US dollars today, then Bitcoin’s next target will continue to move towards the pressure level of 70,000 US dollars. If the daily level closing line does not stand above 65,000 US dollars today, the short-term daily level is likely to fall back to the daily level moving average support area of 61690-59380.
According to the data, the US spot Bitcoin ETF purchased 6,573 Bitcoins last week. The market value and stock of stablecoins are also increasing. This shows that a large amount of traditional funds have continued to flow into the crypto market after the interest rate cut. From the market this morning, we can see that it has been a long time since we saw a V-reversal after the rapid decline of Bitcoin. It is obvious that this wave is to explode the high-leverage Tiandizhen market. The current price has broken through the intraday high, which shows that the market funds are very sufficient. The peak bull market is on the way. Don't wait until the market continues to reach new highs before you realize it.
