The Bitcoin market is in a frenzy, and the three driving forces behind it

Last night, the Bitcoin market was like an ignited engine, soaring all the way, directly breaking through the $71,000 mark, shocking the entire cryptocurrency circle. At the same time, Ethereum also showed a strong rebound, with an increase of nearly 20%, and the price rushed to $3,700. Other mainstream concept coins such as LDO, OP, ARB, UNI and ENS followed closely, and recorded more than double-digit increases.

There are three key driving forces behind this wave of cryptocurrency market madness.

First, a major event broke out on the supply side. The Venezuelan government recently announced a ban on cryptocurrency mining due to excessive electricity demand. This policy directly led to the disconnection of all Bitcoin mines from the power grid and the seizure of more than 11,000 Bitcoin mining machines. This move undoubtedly reduced the supply of Bitcoin in the market, while at the same time, the demand side continued to expand. The net assets of Hong Kong ETFs soared by US$244 million, and the US ETFs accumulated more than 14,000 Bitcoins in the past week.

Secondly, the weakening of the US dollar's credit has also brought opportunities to the cryptocurrency market. Recently, spot gold has continued to rise strongly, and Bitcoin, known as "digital gold", has naturally been favored by the market. Although the US dollar index is still high, the upward trend of physical assets such as gold cannot be ignored. This trend is also reflected in cryptocurrencies such as Bitcoin, further driving the market's rise.

Finally, changes in market sentiment are also an important factor driving this wave of market conditions. As investors' understanding of the cryptocurrency market deepens, more and more people are beginning to pay attention to and participate in it. At the same time, the US CPI inflation data in April was in line with expectations, which also raised market expectations for interest rate cuts. Once the interest rate is cut, liquidity will be released, which will undoubtedly be a major positive for the crypto market.

In summary, the madness of the Bitcoin market is not accidental, but the result of the combined effect of multiple factors. However, the market is always full of uncertainty, and investors need to remain rational and do a good job of risk management while participating.

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