Bitcoin breaks through historical highs, market sentiment is soaring.

As of the end of May 2025, the price of Bitcoin (BTC) has surpassed $110,000, setting a new historical high, with an intraday fluctuation range between $107,083 and $109,057. This surge is mainly driven by multiple factors, including institutional capital inflows, favorable policies, the halving effect, and the uncertainty of the global macroeconomic environment.

Key factors driving the rise of Bitcoin

1. Approval of spot ETFs and capital inflows

Since the beginning of 2024, when the U.S. Securities and Exchange Commission (SEC) approved 11 Bitcoin spot ETFs, the participation of institutional investors has significantly increased. Among them, BlackRock’s iShares Bitcoin Trust (IBIT) has surpassed $50 billion in assets in just 11 months, making it one of the most successful ETF issuances in history. The success of these ETFs has attracted a substantial influx of funds, further driving up the price of Bitcoin.

2. Halving Effect and Supply Reduction

In April 2024, Bitcoin will complete its fourth block reward halving, reducing the block reward from 6.25 BTC to 3.125 BTC. Historically, halving events tend to drive up the price of Bitcoin in the following year. This halving further restricts the supply of Bitcoin, increasing its scarcity and providing support for the price.

3. The U.S. government’s strategic Bitcoin reserves

In March 2025, President Trump signed an executive order to establish the U.S. Strategic Bitcoin Reserve, incorporating Bitcoin into the national reserve assets. The U.S. government holds approximately 207,189 BTC, becoming the largest national holder in the world. This move not only enhances the legitimacy of Bitcoin but also encourages other countries to consider incorporating Bitcoin into their reserve assets.

4. Macroeconomics and Inflation Pressure

Against the backdrop of increasing global economic uncertainty, Bitcoin has become a favored hedge asset against inflation and currency depreciation. The U.S. Federal Reserve (Fed) is expected to maintain interest rates unchanged in early 2025, but the market anticipates up to two rate cuts before the end of the year, further enhancing the appeal of Bitcoin.

The potential trend of Bitcoin

Multiple analysts hold an optimistic attitude towards Bitcoin’s future price performance:

• MicroStrategy co-founder Michael Saylor predicts that Bitcoin will reach $200,000 by 2025.
• Fundstrat’s Tom Lee predicts that Bitcoin will reach $250,000 in 2025.
• Standard Chartered predicts that Bitcoin will reach $200,000 by the end of 2025.

These predictions are based on multiple considerations such as increased institutional adoption, reduced supply, and macroeconomic factors.

Potential Risks and Challenges

Despite the optimistic outlook, Bitcoin still faces the following risks:

• Policy uncertainty: Although the current policy environment is favorable, changes in regulatory policies in the future may impact the market.
• Market Volatility: Bitcoin price volatility is high, and investors need to manage risk.
• Technical challenges: The scalability and energy consumption issues of the Bitcoin network still need to be addressed to support its long-term development.

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Summary

Considering all factors, Bitcoin is showing strong upward momentum in 2025, driven by the participation of institutional investors, policy support, reduced supply, and macroeconomic factors that collectively push Bitcoin’s price higher. Despite the risks, Bitcoin’s position as digital gold is increasingly solidified, and its future development is worth looking forward to.