Why is Bitcoin Rising? The Logic Behind the $110,000 Breakthrough and Future Outlook

May 22, 2025, Bitcoin price First broke through $110,000, reaching as high as $111,900, with a market value of $21.84 trillion, ranking fifth in global assets. This milestone is not only a landmark event in the cryptocurrency market but also reflects the combined effect of multiple structural forces. This article will analyze the core logic of this round of Bitcoin’s rise from the dimensions of policy, funds, technology, and macroeconomics.

Regulatory framework improvement: Accelerating compliance process

The direct driving force behind this round of Bitcoin rise comes from the significant improvement in the global regulatory environment. On May 19, the U.S. Senate passed the “GENIUS Stablecoin Act” procedural vote, requiring stablecoin issuers to meet full reserve and regular audit requirements, and prohibiting the circulation of unregulated algorithmic stablecoins. The bill provides an institutional channel for compliant funds to enter the crypto market and is seen as the first federal-level stablecoin legislation in the United States.

At the same time, on May 21, the Hong Kong Legislative Council took the lead in passing the “Stablecoin Bill”, setting a regulatory benchmark for the Asian market. The coordinated advancement of policies in the two regions has not only reduced market uncertainty but also provided institutional investors with a clear compliance path, enhancing market confidence.

Institutional funds leading: the shift from ‘peripheral’ to ‘mainstream’

The continuous influx of institutional funds is the core feature of this round of market. Data shows that since early April, the cumulative net inflow of Bitcoin spot ETF has exceeded 9 billion US dollars, becoming the main source of incremental funds in the market. Listed companies represented by Strategy have been increasing their holdings frequently, currently holding a total of over 550,000 Bitcoins, further consolidating the consensus of ‘buy and hold’.

It is worth noting that Glassnode data shows that the illiquid supply of Bitcoin (i.e., Bitcoin held for the long term) has reached a historical peak, indicating that this round of rise is mainly driven by institutional funds rather than retail short-term speculation. This structural change significantly enhances Bitcoin’s positioning as ‘digital gold’.

Macroeconomic Drivers: Risk-Off Demand and Liquidity Rebalancing

Against the backdrop of global inflation pressure and concerns about currency devaluation, the scarcity (total of 21 million coins) and anti-inflation properties of Bitcoin are being revalued. JPMorgan pointed out that recently Bitcoin and gold have shown a “zero-sum game” feature, with funds shifting from traditional safe-haven assets to the crypto market.

In addition, the accelerated issuance of US Treasury bonds and the high consolidation of gold prices have prompted some capital to seek non-sovereign asset allocation. Local governments (such as New Hampshire) are trying to build a Bitcoin reserve architecture, further strengthening its legitimacy as a “value storage tool”.

Technical Support: The Evolution of Market Structure and Trading Logic

From a technical analysis perspective, Bitcoin experienced a high-level consolidation and formed a “golden cross” (the 50-day moving average crossed above the 200-day moving average) after breaking through $100,000 on May 8, marking the establishment of a medium- to long-term upward trend. The successful defense of key support levels (such as $102,000) and the increasing participation of leverage in the derivatives market have jointly driven the price breakthrough.

The follow-up of high-frequency quantitative trading and trend strategies further amplifies the effect of technical breakthroughs. For example, the confrontation between long and short positions on platforms like Hyperliquid accelerates the resonance of price fluctuations and market sentiment.

Future Outlook: Opportunities and Risks Coexist

Despite Bitcoin breaking through historical highs, the market has entered a stage of high volatility and high leverage gambling. Analysts generally believe that if the support near $110,000 is breached, it may trigger a technical pullback. However, in the long run, the compliance of stablecoins and the entry of long-term capital such as pension funds may drive Bitcoin to appreciate by 20%-50% in the next 6-12 months. On the risk side, the uncertainty of the Federal Reserve’s monetary policy, the pace of regulatory guidelines implementation, and the extreme market sentiment are still potential disruptive factors.

Bitcoin has broken through $110,000, which is the result of the combined effects of policy, funds, technology, and macro narratives. As the crypto market transitions from ‘barbaric growth’ to ‘institutional reassessment,’ Bitcoin’s role is evolving from a speculative tool to a crucial variable in global asset allocation. For investors, while pursuing profits, they need to be vigilant of short-term volatility risks and deeply understand the underlying logic of blockchain technology and digital finance to navigate this transformation prudently.