BTC breaks $112,000 to a new high: What factors are driving it and what will happen in the future?

Shaw, Golden Finance

The global market has been turbulent recently. Bitcoin hit a new record high after nearly two months.

While the financial market is generally concerned about the policy direction of the Federal Reserve, Bitcoin suddenly exerted its strength in the early morning of this morning, breaking through the $110,000 mark and the high price of May 22, reaching a maximum of $112,009 (CMC data is $111,925.38), an increase of 3.1%, making its cumulative increase this year close to 20%. This wave of Bitcoin's rise still drives the rise of almost the entire cryptocurrency market.

Previously, Bitcoin broke through $110,000 during the "Pizza Festival", an important festival in the crypto industry. In less than two months, Bitcoin has once again set a new record high. What factors stimulated the sudden strength of Bitcoin this time? How will the market trend in the future?

1. Multiple factors stimulate BTC to continue to rise

1. The Fed's policy trend is unclear, highlighting BTC's safe-haven asset attributes

The minutes of the June meeting released by the Federal Reserve on the same day brought complex but suggestive information to the market. The minutes showed that there were obvious differences within the Federal Reserve on the outlook for monetary policy, divided into three major camps: (1) Mainstream camp: Most participants assessed that it might be appropriate to lower the target range of the federal funds rate this year, but ruled out the possibility of an immediate rate cut in July; (2) Hawkish camp: A few participants believed that the target range of the federal funds rate should not be lowered this year; (3) Dovish camp: A few participants (possibly including Federal Reserve Board members Waller and Bowman) pointed out that if the data development is in line with their expectations, they would be willing to consider lowering the target range of the policy rate at the next meeting.

Although there are differences within the Fed, the signal that "most participants assessed that a rate cut this year may be appropriate" has undoubtedly strengthened the market's expectations for future liquidity easing, which is a positive macro catalyst for risky assets such as Bitcoin.

For details, please refer to 《How many times did Trump call for Powell to cut interest rates? Why didn't Powell cut it? 》

2. Trump's tax and spending bill was introduced, and fiscal risks gave rise to BTC demand

US President Trump signed the "big and beautiful" tax and spending bill on July 4, local time, making it effective. The bill is controversial for cutting federal aid, increasing long-term debt, and cutting taxes for the rich and big companies. If implemented as it stands, the bill will add about $3 trillion to the federal deficit over the next 10 years; if some expiring clauses are extended, the deficit could be as high as $5 trillion.

After the bill takes effect, its revenue and expenditure mix will put the U.S. national debt on an unsustainable path.

Although the U.S. government will not default in the short term, an unsustainable debt path will increase the long-term risk of macroeconomic mismanagement, thereby increasing investors' interest in non-sovereign value stores such as gold and Bitcoin.

For details, please refer to "The Great Beautiful Act: What are the key contents and why Musk strongly criticizes it"

3. The market no longer cares about the tariff war, and the US stocks and cryptocurrencies have recovered their losses and set new highs

On the 7th local time, US President Trump signed an executive order to extend the so-called "reciprocal tariff" suspension period, and postponed the implementation time from July 9 to August 1. Starting from the early morning of the 8th Beijing time, Trump has successively announced his tariff letters to many countries. Trump has now sent tariff letters to 22 countries. The market no longer cares about the tariff war. After the tariff war in April, US stocks have recovered all their losses and set new highs. In the early morning of today, the three major US stock indexes rebounded, and the Nasdaq closed at a record high again.

Although tariffs have impacted the crypto market, the recent market performance has been very stable, reflecting the volatility and responsiveness of cryptocurrencies during periods of global uncertainty. Cryptocurrencies are also increasingly seen as a valuable hedging tool that is not affected by any government or policy decisions. Therefore, investors may be more inclined to Bitcoin, a safe-haven hedging asset, thereby stimulating the rise of Bitcoin.

4. SEC releases statement on securities tokenization, and cryptocurrencies enter the mainstream financial system

The U.S. Securities and Exchange Commission (SEC) issued a statement on securities tokenization, stating that blockchain technology has opened up a new model for issuing and trading securities in a "tokenized" form. Tokenization has the potential to promote capital formation and enhance investors' ability to use their assets as collateral. However, tokenized securities are still securities. Therefore, market participants must carefully consider and comply with the relevant provisions of federal securities laws when trading such instruments.

Recently, Robinhood and Kraken launched tokenized stock trading for the first time. Robinhood's system is based on Ethereum's Layer 2 network Arbitrum, while Kraken's xStocks system is based on Solana. SEC Chairman Paul Atkins called tokenization a major "innovation," adding that the U.S. SEC "should focus on how to advance tokenization in the market" and that the days of regulation through law enforcement "are over."

The rise of tokenized securities has driven the blockchain and crypto industries to enter the mainstream financial market and stimulated the continued rise of Bitcoin and other cryptocurrencies.

For details, please refer to "The wave of tokenized US stocks is coming. Who is defining the new paradigm of on-chain securities? 》

5. Cryptocurrency vault companies continue to emerge, and ETF and other demands reshape the BTC market landscape

Enterprise Bitcoin investment pioneer Strategy has increased its holdings of Bitcoin in large quantities, with a market value far exceeding the value of Bitcoin on its balance sheet, indicating that the market has excess demand for Bitcoin exposure through equity instruments. More companies are beginning to adopt this strategy, and some companies have expanded it to other digital assets besides Bitcoin. In addition to Bitcoin, SharpLink Gaming announced that it will transform into an Ethereum Treasury company with the support of crypto investors such as Consensys. Other entrepreneurs have further expanded the model and created crypto vault companies for Solana (Upexi), XRP (VivoPower) and even Trump-themed meme coins (Freight Technologies). The surge in crypto vault companies shows that investors have a strong interest in exposure to crypto assets listed and traded on stock exchanges.

In addition, demand for traditional financial instruments such as ETFs is reshaping the Bitcoin market landscape. Unlike the past, which mainly relied on retail investors, the institutional capital inflows behind the current round of rise present structural characteristics. Data show that institutional investors continue to buy Bitcoin through various financial instruments, and this demand pattern is more stable than the historical speculative buying.

For details, please refer to "Grayscale: The Great Beauty Act and Crypto Treasury Companies Are Generating Bitcoin Demand"

II. What will be the future trend of Bitcoin and the crypto market

Currently, not only the cryptocurrency market, but also the strength of large technology stocks has stimulated the return of risk appetite, the three major US stock indexes have rebounded, and the Nasdaq closed again to set a new record. Nvidia once broke through the $4 trillion market value. The demand for the 10-year US Treasury auction was strong, and the US Treasury price strengthened to recover all the losses this week. It can be said that the current bull market is already in the rhythm of development. What will happen to the Bitcoin cryptocurrency market in the future? Is there any motivation to continue to exert its strength?

At present, the channel for Bitcoin to continue to rise has been opened. It is still unknown whether other altcoins can follow the rise.

1. Adam Guren, chief investment officer of Hunting Hill, pointed out that Bitcoin's breakthrough of $112,000 reflects the compound effect of ETF fund inflows, rising institutional adoption and a favorable macroeconomic environment: "Unlike previous cycles, current demand is structural, regulated and sticky."

2. Vincent Liu, chief investment officer of cryptocurrency trading company, said that traders should be vigilant about potential profit-taking or macroeconomic changes, which may trigger a pullback, but the current trend remains firmly bullish.

3. Axel Adler Jr, an analyst at CryptoQuant, said that the 30-day unrealized P/L ratio of Bitcoin is at the 80% percentile level. This indicator shows that the ratio of the amount of coins currently in a profitable state to the amount of coins in a loss state is significantly higher than usual, and most Bitcoin holders are in a profitable state. Since the indicator has not yet reached the extreme range of 90-100%, it means that there is still room for Bitcoin prices to rise further before holders begin to actively sell.

4. Matt Mena, a cryptocurrency research strategist at 21Shares, said: As the M2 money supply begins to rise again, historical data shows that some liquidity will flow into Bitcoin and other digital assets. Historically, Bitcoin prices have been tracking the M2 money supply, which is the Federal Reserve's estimate of liquid assets, including cash, deposits in checking accounts, savings accounts, and other short-term savings tools such as money market funds. Crypto influencer Anthony Pompliano said: If Bitcoin continues to follow the growth of money supply, we may see the price of each Bitcoin reach $150,000 by the end of the year.

5. Coindesk analyst Omkar GodboleTechnical analysis shows that a potential bullish trend is forming on the chain, and more and more traders believe that Ethereum (ETH) is expected to hit $3,000 in the near future. In addition, the Ethereum validator architecture is undergoing a change, which may consolidate ETH's position as Wall Street's most popular programmable asset.

6. ARK Invest CEO Cathie Wood said that BTC prices will increase 15 times in the next five years. "BTC represents a unique global currency system, and its volatility is decreasing as more and more investors hold it."