Why Did Bitcoin Take Off? The 6 Factors That Really Matter

Bitcoin has just crossed $120,000 and continues to rise. If you were wondering what is happening, here is the truth: it's not magic, it's numbers.

Scarcity Is The Heart

There are only 21 million Bitcoin. Period. This does not change with legislation or monetary policy. 19.6 million have already been mined, leaving only 1.5 million to create. The halving in April 2024 cut the new coins generated ( from 6.25 to 3.125 BTC per block), further tightening the supply. Some analysts estimate that 3-4 million are permanently lost. The simple math: less supply + constant demand = higher price.

The Institutional Invasion

This is the game changer. The Bitcoin ETFs approved in 2024 attracted $86 billion just in BlackRock's iShares. ETF inflows exceeded $13 billion this year, surpassing Bitcoin production. MicroStrategy leads with 582,000 Bitcoin valued at ( billion. More than 244 companies now hold Bitcoin on their balance sheets, nearly double from a year ago.

Unlike previous cycles driven by retail traders' FOMO, there are now sophisticated institutional investors holding Bitcoin for the long term. This means stronger price support.

The Network Strengthens

The Lightning Network allows for instant low-cost transactions. The total hash rate is at all-time highs $62 more miners = more secure network). 15 years without successful hacks. Developers continue pushing improvements. Bitcoin is no longer an experiment, it is infrastructure.

The Macroeconomic Context

Persistent inflation. Weakness of the dollar. Central banks with expansionary policies. Bitcoin is the hedge: fixed supply, not erodable by money printing. When everything becomes uncertain, investors flock to assets with guaranteed scarcity.

Favorable Legislation

The “Crypto Week” at Congress is not an anecdote. The proposals (CLARITY Act, Anti-Surveillance CBDC Act, GENIUS Act) indicate increasing government acceptance. Regulatory clarity = fewer institutional barriers.

The Psychology Changed

Before: Retail FOMO → bubbles → 80% crashes. Now: institutional participation + cycles aligned with halvings + more sophisticated community. The market recognizes patterns and positions itself early. The 4-year halving cycle becomes a self-fulfilling prophecy.

What Does It Not Mean?

Current rises ≠ infinite growth. Bitcoin remains volatile. Corrections of 20-50% are normal even in bull markets. The fundamentals are solid, but that does not guarantee daily profits.

Key Data

• ETFs accumulate ( billion in assets
• SEC Approval: January 2024 = turning point
• April 2024 Halving = 50% reduction in new supply
• 244 companies with Bitcoin in treasury
• Lightning Network: sub-second transactions

The Real

This cycle feels different because it is. It is not pure speculation. But that does not mean ignoring the risk. Average your purchases, take profits systematically, rebalance your portfolio. The best investors understand both why Bitcoin rises and when it might fall.