Bitcoin Multiple Drivers Behind the Recent Rally
Since early 2024, the Bitcoin market has experienced a significant uptrend, with prices briefly surpassing $73,500 in March 2024 and surging to an all-time high of $90,000 in November of the same year.Moving into 2026, Bitcoin once again surpassed $72,500 on April 8. This series of strong performances was not driven by a single factor but rather resulted from the combined effect of several key events and market trends.
Approval of U.S. Spot Bitcoin ETFs
In January 2024, the U.S. Securities and Exchange Commission (SEC) approved the first spot Bitcoin ETFs, a move widely regarded as a milestone for the cryptocurrency industry. This development provided traditional financial investors with a regulated and more accessible channel for investing in Bitcoin, effectively lowering the barrier to entry for institutional investors into the crypto market.The launch of these ETFs has significantly enhanced the liquidity and accessibility of Bitcoin, attracting a large amount of institutional capital that had previously been on the sidelines.For example, the iShares Bitcoin spot ETF (BlackRock) has attracted tens of billions of dollars in cumulative capital since its launch; on November 11 and 12, 2024, alone, the Bitcoin spot ETF attracted $2 billion in new investments.
Bitcoin The Fourth Halving
On April 20, 2024, Bitcoin completed its fourth “halving” in history. This halving reduced the new Bitcoin reward miners receive for mining from 6.25 BTC to 3.125 BTC.The halving mechanism is designed to increase the scarcity of Bitcoin by reducing the supply of new coins. Historical data shows that following the first three halvings, the price of Bitcoin rose significantly. Although some analysts had suggested that the market may have already priced in the impact of the 2024 halving, expectations of a long-term reduction in supply remain a key narrative supporting the price.
Expectations of Federal Reserve Rate Cuts and Their Impact
From the second half of 2024 through 2025, the market widely expects the Federal Reserve to begin a cycle of interest rate cuts.Rate cuts typically lower borrowing costs, increase overall liquidity in financial markets, and may prompt investors to shift funds from low-yield assets to asset classes such as Bitcoin that are viewed as high-risk, high-return. This shift in the macroeconomic environment provides potential positive support for risk assets, including cryptocurrencies.
Continued Growth in Institutional Investor Interest
Institutional investors continue to show strong interest in allocating assets to digital assets, viewing Bitcoin as a form of “digital gold” or a tool to hedge against inflation and currency volatility. As of the second quarter of 2024, the number of institutional investors holding the Bitcoin ETF increased by more than 30% quarter-over-quarter, reaching 1,271.A survey by Coinbase shows that, as of 2024, the majority of institutional investors plan to increase their cryptocurrency holdings by 2026.This continued inflow of institutional capital has not only brought incremental funds to the Bitcoin market but has also gradually shifted its pricing mechanism from a simple “halving cycle narrative” toward the asset allocation logic of traditional capital markets, while significantly increasing its correlation with tech stocks such as the Nasdaq index.
Summary
Overall, the price appreciation of Bitcoin in 2024 and beyond is the result of multiple factors acting in concert: regulatory recognition and capital inflows driven by the approval of spot ETFs; the halving event reinforcing scarcity; liquidity support provided by expectations of macroeconomic interest rate cuts; and the growing demand for strategic allocation among institutional investors.These factors have collectively propelled the Bitcoin into a new phase of development, and its market performance is becoming increasingly correlated with that of traditional financial markets.
