1. The main factor affecting the price of Bitcoin is the risk preference of US stocks.
From a historical perspective, the composition of the coin price in the bull market of 2014 and 2017 and the bull market of 2021 and 2024 are completely different. In 2014, it was ASIC that led to the gradual expansion of Bitcoin to larger retail investors other than geeks, and in 2017, ICOs and other events made Bitcoin almost known to everyone. Participants in these two rounds were still retail investors.
The price of the currency is determined by two aspects: mining costs and market sentiment. Both of these aspects are based on the halving cycle specified in the Bitcoin white paper. According to the halving cycle chart, the new supply of Bitcoin mining output has a huge impact on the circulating market due to the initial halving. And this market is almost unaffected by other markets. In 21 and 24, everything has changed.
In 2021 and 2024, as for the mining cost, the impact of halving on the circulating market is getting smaller and smaller due to the increasing number of coins mined. Therefore, the ability of halving to affect prices through supply is also getting smaller and smaller. At the same time, the newcomers in the cryptocurrency circle at this stage have changed from retail investors to Wall Street, which directly strengthens the correlation between Bitcoin prices and other financial assets.
At the end of 2024, the cost of mining one Bitcoin was about $30,000, and the price of Bitcoin was $100,000. There is still a lot of room for growth after $100,000. The "P/E ratio" above $30,000 is almost entirely due to the increase in risk appetite caused by the growth of the US stock market (AI hype, interest rate cut expectations, Trump transactions, etc.). This can be confirmed by the correlation between Nasdaq and Bitcoin.
The price of the currency has gone from being determined by the white paper and the community in 2014-2017 to being basically determined by Wall Street in 2021. This change not only indicates that the rule of a four-year bull market is likely to be broken. It also suggests that Bitcoin is likely to be subject to major setbacks by over-invested US AI, shaky US Treasury bonds, Wall Street gearing up for revenge against Trump, and the US stock market under heavy pressure.
2The bottleneck of blockchain technology itself is difficult to break through
As a technology, blockchain not only has halving in each bull market, but also technological development is an important direction of market sentiment. In 2014, it was ASIC, in 2017, it was ICO, and in 2021, it was a technological explosion (DeFi, NFT, GameFi, Filecoin, etc. What will happen in 2024? Inscription or AI?
There is nothing much to say about the inscription. But depin is a pseudo-demand like file. A real demand for stable profits cannot tolerate the fluctuation of computing power from bull to bear. The most important thing is that the essence of blockchain is to sacrifice "cost" in exchange for "security". This proportion of sacrificed cost is considered innovative in finance, but what about storage and AI? Can you imagine checking the generated results 20 times before sending them to users?
From the perspective of technological development, the development of blockchain technology has encountered a major bottleneck. The massive loss of talent in this industry in the past two years can also prove this fact. Another fact that proves this is that in the last round, memes started to rise every time the momentum of the market was exhausted, and they were immediately pulled back after a wave of rise. What is this round? Only memes, almost no technology.
Whether it is the lack of technical progress or the market's risk appetite for U.S. stocks, it shows that this round of Bitcoin bull market lacks a stable foundation and may falter at any time.
Perhaps the decision not to cut interest rates in December and Trump’s coming to power were both turning points.
$btc $eth $sol