BTC hits new high after a month: What factors drive it and what will the future trend be?

Shaw, Golden Finance

Bitcoin surged strongly this morning, briefly breaking through $123,500 to reach a new high, surpassing the previous all-time high of $123,205.12 set on July 14. The cryptocurrency market generally rose, with Ethereum continuing to strengthen, having already reached its highest level since November 2021.

Meanwhile, the Nasdaq and S&P 500 indices continued to hit record closing highs. Bullish, a "newcomer in the cryptocurrency world," saw its debut surge nearly 200%, before the gains subsequently fell sharply to 89%.

What are the driving factors behind this round of Bitcoin and crypto market gains, and how much can we expect from this market trend?

I. What Factors Drive This Market Rally?

1. Corporate Coin Hoarding Intensifies, Institutional Funds Invest Significantly

Building cryptocurrency treasury reserves has become a popular trend among listed companies. Led by MicroStrategy, led by Michael Saylor, an increasing number of listed companies are adopting a corporate strategy of hoarding Bitcoin, significantly boosting market demand. This practice has recently expanded to cryptocurrencies such as Ethereum, driving a rally across the digital asset sector. Among these companies, MicroStrategy and Metaplanet are prominent Bitcoin treasury reserve companies, while BitMine and SharpLink are prominent Ethereum treasury reserve companies. Data shows that the top five Bitcoin reserve entities by holdings hold a total of 772,359 BTC. The top 100 entities hold a combined 951,323 BTC. Institutional holdings of Bitcoin have reached 3.64 million, the majority of which is held by exchange-traded funds (ETFs) and mutual funds. As for Ethereum, according to Strategic ETH Reserve, 14 Ethereum treasury companies currently hold a total of 2.5 million ETH (valued at $11.25 billion), representing approximately 2.08% of the total Ethereum supply. Unlike previous retail-driven rallies, this Bitcoin bull run exhibits distinct institutional characteristics. Continued inflows into exchange-traded funds (ETFs) have provided stable funding support for Bitcoin, maintaining a relatively steady upward trend even amidst technical resistance. Ethereum's rise is primarily driven by sustained demand from newly active corporate investors, demonstrating a diversification of institutional investment strategies. Standard Chartered Bank analysis indicates that the emergence of Ethereum treasury reserve companies and increased industry participation are catalysts for this increase in demand. This trend mirrors Bitcoin's early adoption patterns, where allocations on corporate balance sheets influenced market perception and liquidity. For details, please refer to "Pantera: DAT Value Creation: A Case Study of BitMine."

2. "Crypto-Stock Convergence" Drives Continued Crypto Market Rise

The crypto market and US stocks have advanced in tandem, reflecting the continued rise in risk appetite in global markets. Analysts say this highlights the deep correlation between cryptocurrencies and the stock market, driven by the Trump administration's friendly policy environment and the influx of institutional capital.

This week's latest US CPI inflation figures met expectations, reinforcing market bets on a September Federal Reserve rate cut. Expectations of an easing financial environment are driving capital flows from blue-chip stocks to more volatile digital tokens, providing macroeconomic support for the "crypto-stock convergence." Analysts believe that the high correlation between cryptocurrencies and traditional stocks has been a notable feature of this rally. Speculative market sectors and major benchmark indices are drawing momentum from the same source of optimism, reflecting a general increase in risk appetite. Ergonia Research Director Chris Newhouse noted, "Cryptocurrencies and equities are positively correlated, with Ethereum showing a stronger correlation with the stock market than Bitcoin. Overall sentiment appears positive." This synergy suggests that digital assets are gradually being integrated into the risk pricing system of traditional financial markets, with institutional investors considering cryptocurrencies a key component of their risk-based asset portfolios. Furthermore, the recent surge in the popularity of several hot crypto stocks has also fueled the crypto market's strength. On August 13, the digital asset trading platform Bullish listed on the New York Stock Exchange under the ticker symbol BLSH. Its stock price doubled intraday on its first day of trading, making it another hot new crypto stock this year, following Circle, the "first stablecoin." Trading was halted several times due to volatility, but the stock closed at $68, up nearly 84% on the day and bringing its market capitalization to nearly $10 billion. To prevent excessive stock price volatility, Bullish allocated approximately 20% of the issued shares to individual investors, exceeding the typical allocation of less than 10%. The company received pre-IPO subscription letters totaling $200 million from prominent institutions such as BlackRock and ARK Invest, demonstrating Wall Street's strong interest in crypto trading platforms. Circle also released its second-quarter 2025 financial results on Tuesday. The report showed that by the end of the second quarter, USDC circulation had increased 90% year-over-year to $61.3 billion, while total revenue and reserve income increased 53% year-over-year to $658 million. The net loss for the quarter was $482 million, primarily due to two non-cash charges related to the initial public offering (IPO). 3. Crypto-friendly Regulatory Policies Drive Market Upturn A series of recent crypto-friendly regulatory policies in the United States have also driven the overall strength of Bitcoin and the crypto market. Last Thursday, Trump issued an executive order encouraging 401(k) retirement plans to invest in alternative assets, including private equity and crypto assets. Currently, 401(k) plans manage $9 trillion in assets, with over 90 million individuals using them across the US. Previously, these plans primarily invested in low-risk assets such as Treasury bonds and mutual funds. Market estimates suggest that if 401(k) plans allocated just 2% of their assets to cryptocurrencies, this would represent approximately $170 billion in new inflows—equivalent to two-thirds of the market capitalization of existing crypto spot ETFs and listed reserves. For more information, please refer to "The Deeper Reasons Behind the Shift in US 401(k) Investments from Low Risk to High Return." Additionally, last week, the US Securities and Exchange Commission (SEC) issued a statement regarding liquidity staking activities, clarifying that they are not considered securities. The SEC stated that participants in liquidity staking activities are not required to register with the SEC under the Securities Act or qualify for registration exemptions under the Securities Act for these activities. SEC Commissioner Hester Peirce, known as "Crypto Mom," stated that market forces will ultimately determine the outcome between tokenized securities and other real-world assets. "We are open to collaborating with those taking different approaches. We look forward to working with you to try different models and see how the market reacts." For details, please refer to "Full Text of the US SEC Statement: Liquidity Pledges Are Not Securities and Do Not Require Registration"

II. What is the Future of Bitcoin and the Crypto Market?

As the current bull market continues to heat up, what will be the future of Bitcoin? Can the cryptocurrency market continue to surge? Let's take a look at the market's views and analysis. 1. Ben Kurland, CEO of cryptocurrency research platform DYOR, said: "Slowing inflation, growing expectations of interest rate cuts, and unprecedented institutional participation brought by ETFs have combined to create a strong tailwind. What's different this time is that the demand base is more mature—this rally isn't just driven by retail enthusiasm, but also by structural buying from asset managers, corporations, and sovereign funds." 2. Jamie Coutts, chief crypto analyst at Real Vision, estimates that the US federal debt has reached a record $37 trillion. The growing money supply and growing inflation concerns could lead to a renewed appreciation for Bitcoin's monetary scarcity, potentially pushing its price above $132,000 by the end of 2025. 3. Axel Adler Jr., an analyst at CryptoQuant, published a chart showing that despite Bitcoin (BTC) reaching a new all-time high (ATH), its realized profit-loss ratio remains near average. In this scenario, the risk of a sharp trend reversal is significantly lower than in the past when the profit-loss ratio peaked and the market was overheated. 3. Crypto analytics firm Swissblock stated, "We always hear people say, 'This is a false breakout rally. Sell-out buying.' That's completely untrue." Since the April lows, this rally has been driven by spot trading—large capital allocators are frantically buying up nearly all remaining BTC. The futures-to-spot ratio has fallen back to its October 2022 low, a sign of epic spot demand. This is real. 4. CryptoQuant analyst Axel Adler Jr. analyzed that the problem in the late bull market lies in investors' declining risk appetite. Data shows that the indicator exceeded 1.9 in March and December 2024, but is currently forming lower peaks, and holders are actively selling, putting pressure on the market. Although investors are still taking profits, the marginal premium on the cost basis brought by each new price increase is becoming increasingly smaller. Analysts say that given the Federal Reserve's expected two rate cuts this year, two more price increases are expected in this cycle, after which selling pressure will outstrip demand and the market will enter a correction phase. 5. Ethereum co-founder and ConsenSys CEO Joe Lubin said that Treasury could push ETH's market capitalization to surpass BTC within a year. 6. CryptoQuant analyst CryptoOnchain said, "Outlook: Market volatility will increase, but the bull market structure remains intact." Short-term: High leverage, resistance levels, and increased inflows into exchanges increase the risk of sharp downside market fluctuations. Medium-term: Strong institutional inflows, ETF demand, and network upgrades should limit a severe market correction and sustain the broader uptrend.