Bitcoin Reaches $95,000: Three Key Factors Driving the Price Surge

Bitcoin has recently reached a significant milestone, climbing to $95,000, its highest price in two months. This surge signals a potential recovery for the cryptocurrency after several weeks of stagnation. Here, we examine the primary factors contributing to this price surge and assess whether the momentum is likely to continue.

1. Return of Capital Inflows into Spot Bitcoin ETFs

One of the primary factors behind Bitcoin’s price increase is the return of significant capital flows into spot Bitcoin Exchange-Traded Funds (ETFs). These funds directly hold Bitcoin and are often seen as a reliable indicator of investor sentiment.

In recent weeks, Bitcoin ETFs have experienced a substantial surge in investments. On April 25, for example, the iShares Bitcoin Trust saw nearly $1 billion in inflows. Between April 21 and April 25, the total inflow into spot Bitcoin ETFs reached approximately $3 billion. This surge in investment suggests a renewed confidence in Bitcoin and has played a crucial role in driving up its price.

2. Shift in Investor Perception: Bitcoin as a Long-Term Asset

Another significant factor behind Bitcoin’s price rise is a shift in how investors perceive the cryptocurrency. Once regarded primarily as a speculative and volatile asset, Bitcoin is increasingly being viewed as a long-term store of value, similar to gold.

As global economic uncertainty continues to rise, many investors are seeking ways to protect their wealth from inflation and market volatility. Gold has traditionally served as a safe-haven asset in such times, but Bitcoin is now being considered by some as a modern alternative, often referred to as “digital gold.” With its inherent scarcity, decentralized nature, and fixed supply, Bitcoin is gaining appeal as a hedge against economic instability.

3. Supply Constraints Pushing Up Demand

The third factor contributing to Bitcoin’s recent price surge is the ongoing supply shortage. Bitcoin’s total supply is capped at 21 million coins, and a significant portion of these coins is already lost or inaccessible. Estimates suggest that between 3 and 4 million Bitcoins are permanently out of circulation, further limiting the available supply.

This restricted supply has led to an increase in demand, particularly from institutional investors, including those managing Bitcoin ETFs. As these investors continue to purchase Bitcoin, they are drawing from the limited supply available on cryptocurrency exchanges, which in turn drives up the price.

Can Bitcoin Sustain the Rally?

The combination of renewed inflows into Bitcoin ETFs, a shift in investor mindset, and a constrained supply of Bitcoin has helped push its price above the $95,000 mark. These factors suggest that the cryptocurrency’s current rally may be sustained in the near term.

The key question is whether Bitcoin can maintain its momentum and continue to rise. If the trends of strong ETF inflows and increased demand persist, Bitcoin could potentially reach new highs, surpassing the $100,000 mark. Investors and market analysts will be closely monitoring the situation as Bitcoin continues to demonstrate its potential as both a speculative asset and a store of value in times of economic uncertainty.

Also Read: Lost Money in Crypto Bankruptcies? 3 Essential Steps to Recover Your Funds