Before the announcement of the US election results, Bitcoin's price fluctuated between $65,000 and $72,000. Everyone was hoping that after Trump won the US election, Bitcoin could quickly break through new highs again. Unexpectedly, from the day the election results were announced, Bitcoin broke through its historical high, rising to around $76,000, and for the next four days, it continuously broke historical highs, finally reaching $80,000 last night. Today it reached the current historical high of $82,380.

Bitcoin just created a historical high of $73,000 this March, continuously refreshing its peak within less than a year. There are 21 million Bitcoins, and the current unit price is around $81,000, making the total market value immeasurable. Prices are not something anyone can easily manipulate, so what forces are behind Bitcoin's recent frequent breakthroughs to new highs?

1. Increased market enthusiasm

With Trump's inauguration and the increased confidence in the crypto market, everyone knows that Trump is a strong supporter of the development of digital currencies, claiming he wants to hoard 1 million Bitcoins and develop digital currencies as a strategic resource for the US. Although these have not yet been realized, he has issued his own digital currency, and his son and wife have also invested in digital currencies. This has further boosted the enthusiasm for the crypto market, resulting in a large influx of funds. As Bitcoin’s price continues to rise, market sentiment becomes even more bullish, with investors optimistic about Bitcoin’s future prospects and flocking to the market, further driving up Bitcoin's price.

2. The scarcity of Bitcoin and the growth in demand

The total supply of Bitcoin is capped at 21 million. As time goes by, the supply gradually decreases while demand continues to increase. This imbalance in supply and demand is a significant factor driving the price up.

3. ETF Inflows

ETFs were highly anticipated at their launch due to a significant inflow of new funds, which also led to Bitcoin reaching new historical prices. However, soon after, the total funds in ETFs began to see a net outflow, and market sentiment started to decline. In contrast, recently, BTC ETFs have seen a continuous influx of large amounts of funds.

Not only did it achieve a new high for daily net fund inflows, but it also set a new high for open positions. The logic is quite clear: after Trump took office, it is very likely that there will be a 'crypto gold standard', with the political power in the US increasingly supporting cryptocurrencies. For traditional financial 'big players', the possibility of allocating funds to crypto is on the rise. BTC ETFs have become the most convenient channel for investing in crypto, and for other US stock investors, BTC ETFs will become very attractive under Trump's endorsement.

4. Interest Rate Cuts

The Federal Reserve cut interest rates by 50 basis points in September, significantly exceeding expectations, leading to a sharp rise in Bitcoin. The November monetary policy meeting confirmed a 25 basis point rate cut, which the market generally interpreted as a positive factor. After all, the previous bull market began with a rate cut in March 2020. With the rate cuts being implemented, it also brings favorable news for digital currencies; after all, with lower interest rates and a drop in gold prices, a better choice for these investors would be to invest their money in digital currencies.

Bitcoin's future direction

As Bitcoin broke through $80,000, many institutions and analysts began to share their analyses, mostly optimistic that Bitcoin would create new highs again. Many forecasts suggest that it will rise to $100,000 by the end of this year or early next year, while some believe it could reach $250,000. Personally, I think based on the current trend, there is a high probability of breaking through the $100,000 mark, while higher prices may have to wait for the next bull market to arrive. Next, Bitcoin will experience consolidation, and the focus will shift to altcoins led by Ethereum. You can clearly feel the strong upward momentum of altcoins like Ethereum and Dogecoin in the past few days, and more energy and funds can be invested in altcoins for good returns!

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