Bitcoin (BTC) at the $100,000 Level: What You Need to Know

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The landmark moment of Bitcoin (BTC) breaking the $100,000 barrier has sparked widespread attention, especially against the backdrop of cryptocurrencies gradually becoming investment tools equivalent to traditional assets such as gold, the US dollar, and crude oil futures. This historic breakthrough for Bitcoin is not only about its price surge, but is also closely related to its unique cyclical characteristics. Here are some key elements you need to understand to help you grasp the reasons behind Bitcoin reaching this price level and the potential implications of this breakthrough.

Bitcoin's Four-Year Cycle and Halving Events

Bitcoin's price cycle is closely related to halving events. Halving is a mechanism in the Bitcoin protocol that reduces the block reward every four years, thereby decreasing the issuance rate of Bitcoin. This mechanism has two main purposes:

Controlling Inflation: By slowing down the issuance rate of new coins, Bitcoin's supply will become scarce, thereby avoiding inflation similar to fiat currencies.

Increasing Market Scarcity: As the supply of Bitcoin decreases, theoretically, this scarcity should drive prices up.

After each halving event, Bitcoin's market behavior typically experiences a certain rise, forming a typical four-year cycle:

Cyclical Rise: After halving, the supply of Bitcoin decreases while demand in the market remains unchanged or grows, often driving Bitcoin's price higher.

Bear Market Cycle: After each price surge, the Bitcoin market also experiences adjustments, entering a downturn or 'bear market', which usually lasts for a while.

This cyclical repetition of rises and falls creates a more regular volatility pattern in the Bitcoin market, and investors and analysts often base their predictions on these cycles.

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