Three major driving factors for the rebound in Bitcoin prices

In the world of digital currencies, Bitcoin is undoubtedly the most representative existence. Since its birth, the price fluctuations of Bitcoin have attracted the attention of countless investors and economists. Especially after a period of downturn, the price of Bitcoin has rebounded significantly recently. This phenomenon has caused people to think: What is the reason for this round of rebound? This article will explore the reasons for the rebound in Bitcoin prices from three aspects and analyze its possible future trends.

First, the recovery of market demand is one of the important reasons for the rebound in Bitcoin prices. After a period of bear market, more and more investors have begun to re-examine Bitcoin and its potential investment value. According to market surveys, many investors have chosen to enter the market after observing the rebound in Bitcoin prices. This increase in demand has directly driven up the price of Bitcoin.

Take 2020 and 2021 as an example. With the spread of the new crown epidemic, the global economy has suffered a heavy blow and the volatility of traditional financial markets has intensified. Against this background, many investors have begun to seek safe-haven assets, and Bitcoin, as a decentralized digital currency, has gradually been regarded as a new "digital gold". Data shows that in the first half of 2021, the trading volume of Bitcoin increased significantly, investors' enthusiasm was high, and prices also rose accordingly. This trend not only reflects the recovery of market demand, but also the recognition of Bitcoin as an alternative investment tool.

Secondly, the participation of institutional investors is also an important factor in driving the rebound of Bitcoin prices. In recent years, more and more institutional investors have begun to include Bitcoin in their investment portfolios. Whether it is hedge funds, family offices, or large enterprises, they are actively exploring investment opportunities in Bitcoin. For example, Tesla announced in 2021 that it had purchased $1.5 billion worth of Bitcoin and planned to accept Bitcoin as a payment method. This move not only injected a lot of money into Bitcoin, but also further boosted its market confidence.

In addition, many large financial institutions have also begun to launch financial products related to Bitcoin. For example, the Bitcoin futures contract launched by the Chicago Mercantile Exchange (CME) allows investors to invest in Bitcoin through the futures market. The launch of these financial instruments has further enhanced the liquidity of Bitcoin, attracted more investors to participate, and promoted price increases.

Finally, technological innovation and changes in the market environment have also provided impetus for the rebound of Bitcoin prices. The continuous development of blockchain technology has provided more possibilities for the application scenarios of Bitcoin. More and more companies and institutions have begun to explore how to apply blockchain technology to actual business, which undoubtedly provides a basis for the use and recognition of Bitcoin. For example, some fintech companies have begun to develop blockchain-based payment systems, making Bitcoin's payment function more convenient.

At the same time, changes in the global economic environment have also created favorable conditions for Bitcoin's rebound. As governments around the world adopt loose monetary policies to cope with economic downward pressure, liquidity is abundant in the market. In this case, investors are more inclined to look for high-risk, high-return investment opportunities, and Bitcoin has undoubtedly become one of their first choices.

After exploring the three main reasons for the rebound in Bitcoin prices, we can't help but wonder: How will Bitcoin trend in the future? With the recovery of market demand, the participation of institutional investors, and the advancement of technological innovation, the price of Bitcoin is likely to continue to rise. However, investors also need to remain vigilant, and market volatility still exists.

For example, in May 2021, the price of Bitcoin once fell below $30,000 due to the tightening of regulatory policies on cryptocurrencies around the world, especially the Chinese government's crackdown on Bitcoin mining. This incident reminds investors that despite the strong momentum of Bitcoin's rebound, market risks cannot be ignored.

In summary, the rebound in Bitcoin prices is the result of the combined effect of multiple factors. The recovery of market demand, the participation of institutional investors and the promotion of technological innovation are all important driving forces for the rise in Bitcoin prices. In future investments, investors should remain rational, pay close attention to market dynamics, and do a good job of risk control in order to seize opportunities in this rapidly changing market.

As an emerging investment asset, Bitcoin's future is full of uncertainty. However, as many successful investors have said, opportunities are always reserved for those who are prepared. Only by deeply understanding the changes in the market and mastering the investment logic of Bitcoin can we be invincible in this challenging field. In this process, investors should not only pay attention to the price fluctuations of Bitcoin, but also pay attention to the technology and market trends behind it. This will help them make more informed investment decisions and seize the opportunities brought by Bitcoin.

In short, as a pioneer of digital currency, Bitcoin has already occupied a place in the global financial market. In the future, with the maturity of the market and the advancement of technology, the price rebound of Bitcoin will not only be a temporary phenomenon, but may become a long-term trend. We look forward to the future development of Bitcoin, and we also hope that investors can remain rational and sharp in this process to pave the way for their investment.

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.

The price of Bitcoin has gradually rebounded since yesterday, approaching the $7,000 mark at one point, with the highest increase reaching 16%. There may be three main reasons for this market rebound:

Source: Pixabay

The Federal Reserve discusses fighting the epidemic through digital dollars

Democratic members of the House of Representatives have proposed two bills around the creation of digital dollars and digital wallets so that the Federal Reserve (Fed) can transfer digital cash directly to individuals and businesses. The move is aimed at supporting the economy during the COVID-19 pandemic, as the United States is second only to China and Italy in terms of the number of confirmed cases.

The two draft bills are called the "Responsibility for Workers and Families Act" and the "Financial Protection and Assistance to American Consumers, States, Businesses, and Vulnerable Populations Act." According to the authors of the legislation, the Federal Reserve will use digital dollars and digital wallets to transfer funds to "qualified individuals", $1,000 for minors and $2,000 for adults.

Both draft documents use the same definition for digital dollars:

“The term ‘digital dollar’ means a balance expressed in U.S. dollar value, which includes a digital ledger entry of a liability recorded in an account at any Federal Reserve bank; or an electronic unit of value that can be redeemed by an eligible financial institution (as determined by the Federal Reserve Board of Governors).

The law is likely to be supported by Congress, and the Fed will not mind, as it has previously admitted that it is considering issuing digital currency.

Update: According to the latest news, the latest version of the U.S. House of Representatives Democratic stimulus bill for the new coronavirus has eliminated the "digital dollar" proposal.

Fed announces unlimited QE, stocks, Bitcoin respond

Yesterday, the Federal Reserve surprised the market by announcing unlimited support for the economy. In addition to buying more U.S. Treasury bonds and mortgage-backed securities, the U.S. central bank will also buy corporate bonds and related exchange-traded funds (ETFs).

Johnny Fine, head of investment-grade bonds at Goldman Sachs, told CNBC:

This is an unprecedented move by the Federal Reserve.

Todd Rosenbluth, director of CFRA Research, an independent institutional equity research firm, said:

“Wow. The Fed will buy investment grade corporate bond ETFs like presumably $LQD $VCIT $SPIB. These funds are diversified and liquid, but demand for the underlying bonds has weakened.
It's a whole new world. ”

The Fed will buy corporate bonds under a program called the Secondary Market Corporate Credit Facility.

The Fed’s unlimited quantitative easing policy has stimulated the stock market, which has encouraged many institutional investors to look at other assets, including Bitcoin.

China is close to defeating COVID-19, and new treatments are being tested

China has reported zero local cases for several days in a row, despite an increase in the number of imported cases. Despite this, businesses in many parts of China are resuming production. However, many are worried that imported cases may trigger another wave.

Another sign of hope is the antimalarial drug known as hydroxychloroquine, which has recently been touted by US President Donald Trump. The drug, which has been around for more than 70 years, has been successfully used as an antiviral against COVID-19 in many hospitals in China, South Korea, and France.

However, many experts warn that the drug and its predecessor, chloroquine, have not yet been officially approved as COVID treatments. In addition, several people have been poisoned or even died from overdoses after taking chloroquine following Trump’s comments.

Although the drug is known to have potentially serious side effects, especially if the dosage is neglected, many trials have begun in Europe as it is one of the drugs that has shown impressive results against the new coronavirus.