What is driving the price of Bitcoin (digital currency) to soar? Recently, the increase in Bitcoin is quite terrifying. This month, it has risen from $6,000 to more than $8,000. Compared with mainstream assets such as gold, crude oil, and stocks, the increase in Bitcoin has more than doubled this year, which can be said to be a complete victory over other markets. Previously, the fact that Bitcoin broke through $8,000 was also a hot search on Weibo, and the traditional media that had been singing the bad news about Bitcoin before the end of last year began to pay attention to this market again. What is the reason for the surge in the price of Bitcoin (digital currency)?

Supply and demand

Many people believe that the total amount of Bitcoin is limited to 21 million, which is the main reason for the rapid increase in Bitcoin prices. Here, the author must refute this view, because this view is completely based on the traditional economic system! The units of Bitcoin are divided into Zhong, Ben, and Satoshi. 1BTC=1000 Zhong, 1 Zhong=1000 Ben, and 1 Ben=1000 Satoshi. Do you still think that the total amount of Bitcoin is small after seeing this? If you are still stubborn, it is because you are still thinking on the basis of 1 RMB=10 Jiao. Often, inertial thinking limits the depth of our thinking!

The prospect of blockchain

Another reason is the underlying technology of Bitcoin, blockchain! Blockchain has the advantages of decentralization, trustlessness, immutability and encryption security. The report released by UBS in October mentioned the problem of regional chain technology. The report shows that by 2027, the investment value brought by regional chain technology will reach 300 billion to 400 billion US dollars worldwide. And as an infrastructure development, regional chain will be applied to more and more scenarios. Then, as a means of payment, the price growth potential of Bitcoin can be imagined! But whether the digital currency market has such a huge value space, let's put a question mark for the time being.

Investor confidence remains unchanged

Although many financial giants and institutions are bearish on Bitcoin, investors still have confidence in the future value of Bitcoin. After all, in history, no trading product has skyrocketed 7.54 million times in eight years. So do investors really believe in the value of Bitcoin? According to data from two Chinese stock exchanges, China's daily stock market trading volume is around 300 billion yuan, and at the peak of the digital currency market in 2017, the daily trading volume reached 340 billion yuan, and Bitcoin alone accounted for 150 billion! Equivalent to half of China's stock market! What is driving investors' fanatical behavior? In behavioral economics, there is an interesting term called "greater fool behavior", which is to say who is more stupid. Although I may not be optimistic about the price of this currency now, I think others are more stupid than me, and there will always be someone to take over. Let those more stupid people take over, then I will make money. Therefore, although I am not optimistic about Bitcoin, I am still willing to invest. In fact, a large part of those so-called investors are speculators, so this is an important reason why the digital currency market has so many fanatics.

Judging from this market, this round of bull market is very different from the previous rounds of bull market. First, there are indeed many institutional investors participating in this market, which shows that Bitcoin is gradually being accepted by mainstream financial people, although they are still in a very cautious stage; second, Bitcoin is beginning to become more relevant to other financial markets and is gradually affected by the international financial situation. This shows that as the size of the Bitcoin market increases, it is gradually moving towards standardization and internationalization.

At present, the scale of the entire Bitcoin market is limited, but judging from this market, this new market does have a lot of room for growth. I hope that it can bring new changes to the existing financial market in the future.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.