Author: 636Marx

The Bit coin ETF saw inflows of $870 million and $893 million on the 29th and 30th respectively, with the daily average inflow doubling. It is expected that the inflow on the 31st will reach around $1 billion. However, it is puzzling that despite such massive inflows of funds, the BTC price has remained stable around $73,000, seemingly indifferent to the approaching $73,620 threshold.

The crypto market is experiencing explosive growth in capital, but the market has formed a trend of local highs, with the crypto market known for its rapid rise and fall seemingly changing its character. The author believes that Bit coin is entering a new stage. To understand this change, one must first recognize that the driving factors of this bull market are more specific, rather than just pure speculation.

Follow the author to discuss how institutional participation, investor behavior, and changes in the market environment have contributed to this phenomenon.

Influx of Institutional Funds: The Pillar Sustaining Bit coin at High Levels

The Bit coin ETF has become a market hotspot, with institutional investors indirectly entering the digital currency market through this channel. This demand brings in nearly $9 billion in daily inflows, supporting Bit coin's price in an unprecedented way.

For a long time, traditional investors have lacked regulatory channels to enter the Bit coin market. The launch of exchange-traded funds (ETFs) has released new financial potential. The Bit coin ETF allows institutional investors to gain exposure to crypto assets without the need to purchase Bit coin directly. They can buy shares in funds that hold digital currencies, thereby avoiding storage issues and regulatory barriers. The results are significant: a surge in market capitalization inflows has stabilized the Bit coin price at new highs.

This influx of funds has cushioned price volatility, helping to maintain Bit coin at local highs - a level that has not been sustained in previous cycles.

Institutional "Fear of Missing Out": The Patience of Crocodiles is Greater than Retail Investors

Fear of missing out (FOMO) has long influenced Bit coin's price trends. However, the current FOMO is different from past trends. Unlike the previous cycles driven primarily by individual investors seeking quick gains, the current FOMO is mainly coming from institutions. Hedge funds, family offices, and even pension funds are viewing Bit coin as a unique investment opportunity to complement their traditional asset portfolios.

The success of the Bit coin ETF has accelerated the herd mentality of institutions, attracting a new wave of investors into the market. These institutions typically have more patience and capital, allowing them to withstand short-term price fluctuations and focus on long-term returns. Compared to retail investors, the crocodiles are fewer and more concentrated, with both money and patience.

Scarcity of Supply: The Impact of Limited Supply

One of Bit coin's most unique features is its hard cap of 21 million coins - a characteristic embedded in its code. With nearly 19 million BTC already mined, time is counting down to this finite total supply.

As institutional interest expands and global adoption grows, Bit coin's scarcity is exerting significant upward pressure on its price. The basic principles of supply and demand in economics show that when supply is limited and demand remains stable or increases, prices will rise. The sustained high levels of Bit coin are pricing in its future scarcity.

USDT Liquidity Injection: Rising Demand for Stablecoins

Another key factor is the role of stablecoins, particularly Tether (USDT). Stablecoins like Tether peg themselves to a stable asset, typically the US dollar, to maintain a stable value.

Recently, Tether has minted an additional $1 billion USDT on the Tron blockchain, and the issuance of new stablecoins is often associated with an increase in Bit coin trading volume, as these stablecoins provide the necessary liquidity for large transactions. By stabilizing liquidity, Tether's liquidity injection has helped maintain Bit coin's current high levels around $73,000.

Expansion and Adoption: Increasingly More Countries Use It to Combat Inflation

The author refers to Bit coin as a "borderless Ponzi scheme," with its remarkable speed and breadth of dissemination. Countries facing high inflation, currency controls, or economic volatility, such as Argentina, Turkey, and Venezuela, are showing growing interest in Bit coin as an alternative to their local currencies. In regions like South America, new services like the Bybit card in Argentina allow users to use Bit coin for everyday purchases.

The Author's Thoughts in Conclusion

Bit coin has shed its volatile nature, marking its maturity. Major companies are investing, regulations are becoming clearer, and inflation concerns are driving the appreciation of Bit coin's value. Bit coin has transcended mere speculation and has become an integral part of the global financial system.

As a non-sovereign, easily accessible, secure, and decentralized asset, Bit coin's future breakthrough of its historical high is unpredictable, but as a stable and respected asset, it is becoming increasingly undeniable.

The author believes that BTC is no longer seen merely as a high-risk gamble, but is becoming a reliable component of the financial world.