Recent Rise of Bitcoin: Multiple Structural Factors Supporting the 5% Surge

Bitwise's Head of Research Ryan Rasmussen points out in his latest analysis that conventional explanations for Bitcoin's short-term price increase are insufficient. Superficially, geopolitical events and interest rate trends are cited, but in reality, the driving forces are more complex and multi-dimensional.

**Institutional Capital's Full-Scale Entry Drives Bitcoin Market**

Since the listing of spot Bitcoin ETFs in 2024, asset allocation by major financial institutions has accelerated. Leading platforms such as Morgan Stanley and Wells Fargo have begun substantial investments in Bitcoin-related products, with single-day ETF net inflows reaching approximately $500 million on January 2nd, indicating a significant rise in institutional demand. This trend is expected to further accelerate in the future.

Long-term-oriented institutional investors such as sovereign wealth funds, university endowments, and pension funds are also beginning to consider Bitcoin allocations more systematically and strategically. The entry of these entities marks a crucial turning point in the overall maturity of the Bitcoin market.

**Favorable Changes in Cryptocurrency Regulations Accelerate Trust Building**

Following policy shifts in 2024, regulatory attitudes toward the crypto industry are turning more friendly. This improvement in the environment allows Wall Street institutions and high-net-worth asset management firms to actively expand their Bitcoin allocations. Increased regulatory transparency lowers psychological barriers for market participants and promotes large capital inflows.

**Recovery of Investment Sentiment in Risk Assets**

Excessive concerns about the AI-related markets are easing. As investor sentiment turns positive, funds are reallocating into risk-oriented assets such as technology stocks and Bitcoin. This psychological shift is a key factor contributing to short-term market upward trends.

**Continuation of Interest Rate Cuts: Structural Support Factors**

The outlook for short-term interest rate cuts remains largely unchanged from previous forecasts. Quantitative easing (QE) is still in its early stages, with widespread market expectations of over 50 basis points of rate reductions by the end of 2026. The continuation of this low-interest-rate environment will continue to serve as a structural support for risk assets, including Bitcoin.

The recent factors that pushed Bitcoin prices up by over 5% are not due to a single geopolitical event but are the result of layered support factors: accelerated institutional entry, improved regulatory environment, market psychology recovery, and ongoing monetary easing policies. These factors are expected to sustain the market's overall upward trend.