Why Bitcoin skyrocketed 10% to hit $25k: A close look at potential drivers

The price of Bitcoin (BTC) surged past the $25,000 mark for the first time since August 2022 before dropping back below this threshold. As of press time, Bitcoin is valued at exactly $24,968.

The 10% jump from $22,000 to $25,000 surprised many, given the recent regulatory crackdowns on cryptocurrencies. This surge is causing investors to wonder what the potential drivers of this price increase are.

Regulatory threats against stablecoins

The current threat of regulatory action against stablecoins may be one cause for this increase. Maybe, as a result, investors are flocking in the other direction to safe havens like Bitcoin and Ethereum (ETH).

Many stablecoin holders, dissatisfied with the 0% interest rate they were receiving, began diversifying their holdings into other cryptocurrencies. This pertains to holders who don’t have the ability to switch to fiat.

This theory would be bolstered if perp financing rates dropped below zero, as investors seeking to maintain risk neutrality would likely liquidate their perp holdings in exchange for Bitcoin or Ethereum.

The S&P 500 is still very close to its highs of the last six months despite the hawkish Non-Farm Payrolls (NFP) and Consumer Price Index (CPI) data that has been issued in recent weeks.

As the demand for cryptocurrencies is connected with the stock market, this protects BTC from being dragged down. Even with layoffs in the computer industry, the economy as a whole is doing well since professionals in that sector makeup just 2% of the workforce.

Hong Kong legalizing crypto

The anticipated legalization of cryptocurrency trading in Hong Kong is another plausible explanation for Bitcoin’s recent price increase. Speculation that Hong Kong would make retail trading lawful for its people in June has been circulating since at least last October.

This follows reports that China is considering softening its anti-crypto stance and may abandon its zero-COVID policy. China’s economy is now second only to the United States in terms of growth rate. Maybe this change will be the catalyst for the next full bull cycle.

This month has been fraught with geopolitical tensions, and if the United States pulls back, other foreign leaders may see it as an opportunity to step in.

From what we can tell in the news, or at least from Twitter, we seem to be on the verge of World War 3. It’s hardly shocking that some value is moving away from SWIFT and into self-custodial, decentralized systems.

The verdict

Although though Bitcoin has gotten off to a strong start in 2023, the cryptocurrency’s value is still 63% lower than its all-time high (ATH), which was $69,044 and was set on November 10, 2021.

The recent increase in the price of Bitcoin may be attributed to a number of different variables, including those that have been mentioned in this article, as well as changes in macroeconomics and a rising interest in equities connected to cryptocurrencies.

These and other market developments that may affect Bitcoin’s future course should be closely monitored by investors as time goes on.