BTC hits a new high: 4 major factors driving it, aiming for $130,000?

Bitcoin surged strongly in the early hours of today, briefly breaking through $124,400, reaching a new high, surpassing the previous historical high of $123,205.12 set on July 14. The Crypto Assets market is generally rising, with Ethereum continuing to strengthen, having already reached its highest level since November 2021.

Meanwhile, the Nasdaq and S&P 500 indices in the US stock market continued to set new closing historical highs. The "new darling of the crypto circle" Bullish surged nearly 200% at its debut, with the increase later significantly retreating to 89%.

What are the driving factors behind this round of Bitcoin and Crypto Assets market rise, and how much has this wave of market seen?

1. What factors are driving this round of market pump

1. The rising expectations of the Federal Reserve cutting interest rates are driving the rise of Bitcoin and other risk assets

The latest CPI inflation figures in the U.S. this week met expectations, reinforcing market bets on a rate cut by the Federal Reserve in September. U.S. Treasury Secretary Basant stated in an interview that the Federal Reserve's rates should be 150-175 basis points lower than they are now, and if the data is accurate, the Fed might have cut rates earlier. Basant believes there is a possibility of a 50 basis point cut, with a series of cuts potentially starting with a 50 basis point reduction in September. Trump continues to pressure the Federal Reserve, stating that it should lower rates to 1%. Additionally, Goldman Sachs' macroeconomic research analysis indicates that the Fed is expected to cut rates by 25 basis points in September, October, and December, totaling three cuts this year. It is anticipated that the Fed will cut rates two more times in 2026, with each cut being 25 basis points, bringing the terminal rate range to 3-3.25%.

The deepening expectations of interest rate cuts by the Federal Reserve have largely stimulated the pump of risk assets such as Bitcoin. As the Federal Reserve cuts interest rates, U.S. Treasury yields decline, and more investors may seek higher-yielding alternative assets. This trend of capital flowing into non-traditional investment categories (such as Crypto Assets) may further support greater rise potential for Bitcoin prices.

2. "Coin-Stock Convergence" drives the Crypto Assets market to continue to pump.

The crypto market is moving in tandem with the US stock market, reflecting the continued warming of global market risk appetite. Analysis indicates that this highlights the deep linkage between crypto assets and the stock market, driven by the dual forces of a friendly policy environment from the Trump administration and a significant influx of institutional funds. Analysts believe that the high correlation between crypto assets and traditional stock markets has become a notable characteristic of this round of rise. Speculative market segments and mainstream benchmark indices draw power from the same source of optimistic sentiment, reflecting a general increase in current market risk appetite. This linkage effect indicates that digital assets are gradually integrating into the risk pricing system of traditional financial markets, with institutional investors considering crypto assets as an important component of their risk asset allocation strategy.

In addition, the recent concentrated outbreak of several "crypto circle" hot stocks has also stimulated the strengthening of the crypto market to some extent. On August 13, the digital asset trading platform Bullish went public on the New York Stock Exchange, with its stock price doubling during intraday trading on the first day of listing, becoming another popular "crypto circle" stock in the US market this year after the "first stablecoin stock" Circle. This stock was temporarily suspended from trading multiple times due to extreme volatility, closing at $68, with an intraday rise of nearly 84%, and a market value close to $10 billion. To prevent excessive stock price fluctuations, Bullish allocated about 20% of the issuance shares to individual investors, higher than the usual less than 10% ratio. Before the issuance, the company had already received a total subscription intention of $200 million from well-known institutions such as BlackRock and ARK Invest, showing Wall Street's strong interest in crypto trading platforms.

Circle also released its Q2 fiscal report for FY 2025 on Tuesday. The report shows that by the end of Q2, the circulation of USDC increased by 90% year-on-year to $61.3 billion, and total revenue and reserve income increased by 53% year-on-year to $658 million. The net loss for the quarter was $482 million, primarily impacted by two non-cash expenses related to the initial public offering (IPO).

3. The trend of enterprises hoarding coins is intensifying, with institutional funds entering the market in large numbers

The establishment of crypto asset reserves by publicly listed companies has become a popular trend. Under the leadership of Michael Saylor's MicroStrategy, more and more listed companies are adopting the strategy of hoarding Bitcoin, significantly boosting market demand. This practice has recently expanded to cryptocurrencies like Ethereum, driving the entire digital asset sector to rise. Companies with Bitcoin reserves include MicroStrategy and Metaplanet. Data shows that the top five Bitcoin reserve entities, ranked by Bitcoin holdings, collectively hold 772,359 BTC. The top 100 entities hold a total of 951,323 BTC. The total number of Bitcoins held by various institutions has reached 3.64 million, with most held by exchange-traded funds (ETFs) and funds.

In addition, TraderT monitoring data shows that the net inflow of the US spot Bitcoin ETF in July was $6 billion. Starting from August 6, the US spot Bitcoin ETF has seen a net inflow for a consecutive week, with inflows reaching $557.53 million. A large amount of capital flowing into the Bitcoin spot ETF is driving the Bitcoin price continuously higher.

Unlike previous bull cycles dominated by retail investors, this round of Bitcoin bull market shows obvious institutional characteristics. Continuous inflow of ETFs has provided stable financial support for Bitcoin, maintaining a relatively steady upward trend even when facing technical resistance. Standard Chartered's analysis points out that the allocation on corporate balance sheets in the Bitcoin space affects market perception and liquidity.

4. Positive encryption regulatory policies drive the market upwards.

Recently, a series of favorable regulatory policies for encryption introduced by the U.S. have also driven the overall strength of Bitcoin and the crypto market. Last Thursday, Trump issued an executive order to promote the investment of 401(k) and other retirement plans in alternative assets, which include private equity, crypto assets, and so on. Currently, the 401(k) plan manages $9 trillion in assets, with over 90 million people in the U.S. using this plan. Previously, this plan primarily invested in low-risk assets, such as government bonds, mutual funds, etc. Market estimates suggest that if the 401(k) plan allocates just 2% of its assets to crypto assets, it would mean an influx of about $170 billion in new funds — equivalent to two-thirds of the current market value of existing crypto spot ETFs and listed reserves. For more details, please refer to "From Low-Risk to High Returns: The Deep Reasons Behind the Shift in American 401(k) Investments."

In addition, the U.S. Treasury Department auctioned off a total of $100 billion in four-week Treasury bills last week, setting a record high. The Fiscal Advisory Committee noted that the recent rise in stablecoin issuance has become one of the emerging sources of demand. According to the GENIUS Act, promoted by President Trump, stablecoin issuers are required to back their crypto assets with safe assets such as government bonds, which has indirectly boosted the demand for Treasuries. Since the introduction of the GENIUS Act, the circulation of stablecoins has been steadily increasing. The stablecoin market experienced a significant surge in market capitalization, reaching $9.11 billion within 23 days. According to data collected from defillama.com and artemisanalytics.com, the total value of the stablecoin market has exceeded $270 billion. The substantial increase in stablecoin issuance and circulation has also become an important buying support for Bitcoin's strong rise.

2. What is the future trend of Bitcoin and the crypto market?

This round of bull market is continuously heating up. What will be the future direction of Bitcoin? Can the Crypto Assets market continue to exert strength? Let's take a look at the market's opinions and analyses.

1 IG market analyst Tony Sycamore stated that the momentum behind Bitcoin's rise comes from the increased certainty of interest rate cuts by the Federal Reserve, continued institutional buying, and the Trump administration's easing of Crypto Assets investment measures. In a statement, he wrote: "From a technical perspective, if Bitcoin effectively breaks through $125,000, it could drive its rise to $150,000."

2 Crypto Assets research platform DYOR CEO Ben Kurland stated: "The slowing inflation, increased expectations for interest rate cuts, and unprecedented institutional participation brought by ETFs have collectively created a strong momentum. What is different this time is that the demand foundation is more mature—this round of pump is not just retail frenzy, but also structural buying from asset management firms, corporations, and sovereign funds."

3 Real Vision Chief Crypto Analyst Jamie Coutts estimates that the U.S. federal debt has reached a record $37 trillion, and the constantly increasing money supply along with escalating inflation concerns may lead people to re-evaluate the monetary scarcity of Bitcoin, potentially pushing the price of Bitcoin above $132,000 by the end of 2025.

4 CryptoQuant analyst Axel Adler Jr released a chart stating that although Bitcoin (BTC) has risen to an all-time high (ATH), the actual profit and loss ratio remains around the average level. In this case, compared to when the profit and loss ratio was at its peak in the past and the market was overheated, the risk of a significant trend reversal is significantly reduced.

5 Crypto Analysis Company Swissblock stated, "We always hear people say: 'False breakout rebound. Offloading and picking up the pieces.' The reality is completely different. Since the low in April, this wave of market activity has been driven by spot - large capital allocators are frantically sweeping up, almost buying up all the remaining BTC. The ratio of futures to spot has fallen back to the lows of October 2022, which is a signal of epic spot demand. This is real."

6 CryptoQuant analyst Axel Adler Jr analyzed that the problem in the late stage of the bull market is the decline in investors' risk appetite. Data shows that in March and December 2024, this indicator had previously broken through 1.9, but currently, the indicator is forming a lower peak, and holders are beginning to actively sell, putting pressure on the market. Although investors are still taking profits, the marginal premium on the cost basis brought by each new price rise is getting smaller. The analyst stated that considering the Federal Reserve is expected to have two rate cuts this year, it is anticipated that there will be two more rises in this cycle, after which the selling pressure will exceed demand, and the market will enter an adjustment phase.

6 Ethereum co-founder and Consensys CEO Joe Lubin stated that the treasury company may drive ETH market value to surpass BTC within a year.

7 CryptoQuant analyst CryptoOnchain stated, "Outlook: Market volatility is intensifying, but the bull market structure remains intact. Short-term: High leverage, resistance levels, and increased inflow of funds to exchanges raise the risk of sharp downward fluctuations in the market. Mid-term: Strong institutional inflows, ETF demand, and network upgrades should help curb severe market corrections and maintain a broader rising trend."