Bitcoin breaks through 40,000 dollars, the driving force behind it

Author: Martin TALK

As the number one cryptocurrency by market capitalization and recognition, Bitcoin has once again broken through the $40,000 mark, attracting global attention. This is the first time Bitcoin has firmly stood above $40,000 since April 2022, marking an important milestone and demonstrating Bitcoin's resilience and growing acceptance in the financial world. Since its inception in 2009, Bitcoin has experienced a rollercoaster of highs and lows, symbolizing the potential and volatility of digital currencies. The recent breakthrough of $40,000 marks a significant moment in its journey, raising questions about the factors driving this growth and the future of this digital asset.

BTC/USDT Chart Since March 2022

Driving Forces Behind

Although there is no direct reason for this surge, momentum has been gradually building over the past month and even throughout 2023. The two culprits behind the 2022 bear market—Do Kwon and Sam Bankman-Fried—have been arrested and extradited, with Bankman-Fried found guilty by a jury a month ago.

The upcoming launch of a spot Bitcoin ETF has also contributed to this surge. Since the ++SEC approved the spot Bitcoin ETF++, BTC has been on the rise. Although there is no specific date yet, market expectations have been building. Galaxy Digital even estimates that the market size for the spot Bitcoin ETF could reach ++$14 trillion++ one year after its launch.

Accompanying the SEC approval is the expectation of interest rate cuts by the Federal Reserve. The market interpreted recent comments from Federal Reserve Chairman Jerome Powell as less hawkish, indicating a need to find a balance between tightening monetary conditions and promoting economic stability. The prospect of lower interest rates is favorable for Bitcoin, as historically, loose monetary policy has been associated with increased speculative trading and higher cryptocurrency prices.

Expectations of rate cuts have driven commodity prices up in advance, with gold prices breaking historical highs just this past weekend, and BTC rebounding over 60% for more than a month. With the U.S. economy potentially entering a recessionary cycle, fund managers predict an 80% consensus for rate cuts in 2024, the highest level of consensus ever recorded in such surveys. Along with the continuous decline of the U.S. dollar index, Bitcoin's price has consistently broken new highs for the year and has returned above $40,000 today.

Another potential catalyst has been repeatedly validated by the market, namely the BTC halving scheduled for 2024. The halving is a mechanism that increases the mining difficulty of BTC while halving the rewards for miners. For more information on the expected halving in 2024, please refer to our ++Top Ten Questions About Halving++. Historically, halving events have effectively slowed the rate at which new Bitcoins enter circulation, leading to significant price surges. As the next halving approaches, investors may buy Bitcoin in anticipation of similar price movements.

Still Want More?

Looking ahead, Bitcoin's trajectory remains a topic of great interest and speculation.

While many investors may sell their BTC holdings when the spot Bitcoin ETF launches, others may view it as a sign of Bitcoin gaining recognition from traditional finance and even the general public. Capital could flow significantly into the crypto market, providing more stability and growth for BTC prices. If the Federal Reserve cuts rates in the coming months, investors will also seek high-yield assets like BTC and other cryptocurrencies.

The halving event is only a few months away. Given that past halving events have triggered significant bull markets lasting for months, we may still see more investors and speculators betting on this upcoming event, pouring increasing amounts of capital into BTC.

Conclusion

BTC's breakthrough of $40,000 reflects the complex interplay of economic factors and market speculation. While the future is uncertain, understanding the dynamics behind these movements will provide valuable insights for investors. Although cryptocurrencies are known for their volatility and high risk, we are fortunate to witness BTC's historical milestone as the first blockchain, a potential disruptor in financial markets, and a truly revolutionary currency.

Recently, Bitget launched a limited-time cashback promotion to celebrate BTC breaking the $40,000 mark, allowing both new and existing users to participate, with a total prize pool including 100,000 USDT and physical rewards—an Apple bundle. Interested friends can join in.

https://www.bitgetapp.com/zh-CN/events/activities/e84ef2401e2c53b8a75ba6cc60047093?color=black

Disclaimer: The views expressed in this article are for reference only. This article does not constitute an endorsement of any discussed products and services, nor does it constitute investment, financial, or trading advice. Consult a qualified professional before making financial decisions. ```