The recent rise of Bitcoin is the result of a combination of many factors.

The recent rise of Bitcoin is the result of a combination of many factors.

1. Continuous strong capital inflow of spot Bitcoin ETF:

• This is the most core and direct driving factor. Since the U.S. Securities and Exchange Commission approved the listing of the first batch of spot Bitcoin ETFs in January 2024, these funds have attracted ** huge inflows of institutional funds**.

• The ETF of Block and Fidelty performed particularly prominently, with their inflow speed and scale far exceeding market expectations. This marks traditional financial capital's large-scale and compliant entry into the Bitcoin market.

• Continuous net inflows (capital inflows far greater than outflows) mean that there is a huge actual buying demand in the market, which directly pushes up the price of Bitcoin.

2. The expectation of the Federal Reserve's interest rate cut has increased:

• Recent U.S. inflation data (CPI, PCE) shows that inflationary pressures have eased, and the market's expectations of the Federal Reserve's interest rate cut in 2024 have increased significantly.

• The interest rate cut is expected to lead to:

• ** Weakening of the US dollar: ** As a non-US asset, Bitcoin is usually negatively correlated with the trend of the US dollar.

• **Risk preference increase: ** High-risk assets such as Bitcoin are more popular under the expectation of liquidity relaxation.

• ** The attractiveness of holding cash and bonds has decreased: ** Investors seek higher-yield assets.

• **Hedge inflation demand: ** Although the attributes of Bitcoin as an inflation hedge tool are controversial, under the expectation of loose monetary policy, some investors still regard it as a potential hedging tool.

3. The upcoming Bitcoin "halving" event:

• It is expected that in mid-to-late April 2024, the Bitcoin network will usher in its fourth halving of block rewards. The reward for miners digging out new blocks will be reduced from 6.25 BTC to 3.125 BTC.

• ** Historical law: ** After the past halving event, the price of Bitcoin has experienced a significant increase (although not immediately). The market generally expects the halving to push up prices by reducing the supply rate of new bitcoins (equivalent to a "supply shock"), especially when demand remains strong or growing.

• **Psychological expectation: ** The halving event is an important and predictable event set in the Bitcoin protocol. Market participants often lay out in advance to form a "buy expectation" market.

4. Hise-averse/alternative asset demand under macroeconomic uncertainty:

• Global geopolitical tensions (such as the Russia-Ukraine conflict and the situation in the Middle East) and the economic challenges faced by some countries (high inflation, currency devaluation) have prompted some investors to regard Bitcoin as a potential risk-averse asset or value storage means (although its volatility is very volatile), or as traditional gold "ALTERNATIVE" CONFIGURATION OUTSIDE THE MELTING SYSTEM.

5. Technical breakthrough and market sentiment promotion:

• When the Bitcoin price breaks through the key resistance level (such as the historical high of $69,000), it will trigger a large number of technical buying and short recovery, forming an upward momentum.

• **Market sentiment (FOMO): ** The rising price itself will attract more attention and capital entry, and the spread of "fear of missing" will further push up the price.

• **Leverage and derivatives markets: ** The active futures and options markets have also amplified the fluctuation of prices.

6. Innovative development of Bitcoin ecology (secondary but cannot be ignored):

• Although Bitcoin is mainly regarded as value storage, its underlying ecology is also developing, such as the rise of BRC-20 tokens and Bitcoin NFT based on the Ordinals protocol, which has increased on-chain activities and usage scenarios, bringing certain new needs and new narratives.

In summary:

• The most core driving force is ** the huge, continuous and growing inflow of institutional capital brought about by spot Bitcoin ETF**, which provides the market with unprecedented stable buying power.

• **Macro environment (interest rate cut expectation) ** provides a favorable background for the entire risky asset market, reduces the opportunity cost of holding Bitcoin, and improves risk appetite.

• The upcoming halving event is Bitcoin's own supply-side narrative, which strengthens long-term bullish expectations.

• Factors such as technological breakthroughs, market sentiment and macro-risk avoidance demand have played a role in fuelling the tide.

Risks to pay attention to:

• Market sentiment changes rapidly, and if the inflow of ETF funds slows down or reverses, it may lead to a retretcement.

• Bitcoin is extremely volatile, and there is a need for technical adjustment after the short-term increase is too large.

• The macro environment (such as repeated inflation data and the lower-than-expected policy of the Federal Reserve) may reverse market sentiment.

• The actual impact after halving needs time to be verified, and historical performance does not represent the future.

Therefore, the current surge is the result of the superposition of multiple favorable factors, among which ETF capital flow and macro expectations are the main engines. While paying attention to opportunities, investors must also attach great importance to their high volatility and potential risks.