In recent weeks, Bitcoin has surged past the $60,000 mark, briefly exceeding $64,000 on February 29 — marking a gain of over 40% in just one month. This sharp rally has reignited investor interest and sparked widespread debate about the sustainability of the current momentum, the underlying catalysts, and the risks involved. Experts point to a confluence of macroeconomic trends, structural developments, and market sentiment as key drivers behind this rally.
What’s Fueling the Bitcoin Rally?
Bitcoin previously reached an all-time high near $69,000 in November 2021. However, it subsequently entered a prolonged bear market due to the Federal Reserve’s aggressive interest rate hikes, high-profile exchange collapses, and increasing regulatory scrutiny — at one point dropping to around $16,000.
According to Zhao Wei, Senior Researcher at OKX Institute, the market began stabilizing in late 2022 after digesting these shocks. “Bitcoin entered a phase of consolidation and recovery,” Zhao explained. “Since then, rising expectations of Fed rate cuts, the launch of Bitcoin spot ETFs, and fresh capital inflows have created a powerful synergy that’s lifting the entire crypto ecosystem.”
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The Game-Changer: Bitcoin Spot ETFs
One of the most significant catalysts has been the U.S. Securities and Exchange Commission’s (SEC) approval of 11 Bitcoin spot ETFs on January 11, including applications from major institutions like BlackRock. This milestone has made it easier for institutional and retail investors to gain exposure to Bitcoin through regulated financial products.
Yu Jianning, Co-Chair of the Blockchain Committee at the China Communications Industry Association and Honorary Chair of the Hong Kong Blockchain Association, emphasized the impact: “The approval provides a compliant pathway for institutional capital and broadens Bitcoin’s investor base significantly.” Data shows that by February 17 — the 30th trading day post-launch — U.S. Bitcoin spot ETFs had recorded a net inflow of $3.317 billion, with total inflows reaching $49.269 billion since inception.
This influx of institutional-grade capital has not only enhanced market liquidity but also boosted investor confidence in digital assets as a legitimate asset class.
Market Sentiment and Technical Factors
Additional factors have contributed to the rally. During the Chinese New Year period, improving global macroeconomic conditions helped lift risk appetite across markets. Moreover, anticipation surrounding Bitcoin’s upcoming halving event — expected in mid-2024 — has further fueled bullish sentiment.
The halving is a built-in mechanism that reduces mining rewards by 50% approximately every four years, effectively slowing new supply growth. Historically, previous halvings have preceded major price rallies, leading many investors to position early.
Yu Jianning also highlighted the role of derivatives and leverage: “Crypto markets are highly sensitive to leveraged trading. When prices rise rapidly, margin calls can trigger forced liquidations of short positions, creating a ‘short squeeze’ that amplifies upward momentum.”
Regulatory Reality: Approval ≠ Endorsement
Despite the excitement around ETF approvals, regulatory caution remains strong. Shortly after greenlighting the ETFs, SEC Chair Gary Gensler clarified that approval does not equate to endorsement. “Bitcoin remains a speculative and highly volatile asset,” he stated. “The ETF approval brings more oversight, not less.”
Legal experts stress that ETFs are merely investment vehicles — they don’t alter Bitcoin’s fundamental nature or regulatory status.
“An ETF is a financial wrapper,” said Xiao Sa, Partner at Beijing Dacheng Law Firm and理事of the China Banking Law Society. “It doesn’t change how cryptocurrencies are classified or regulated globally. Most jurisdictions still treat Bitcoin as a virtual commodity or speculative asset subject to strict rules.”
Moreover, while ETFs may simplify access for investors in certain countries, they do not override national prohibitions.
China’s Stance Remains Firm
In mainland China, cryptocurrency trading and related financial activities remain strictly prohibited. A 2021 notice issued by the People’s Bank of China and other regulatory bodies clearly states that “virtual currency-related business activities constitute illegal financial operations,” including services provided by overseas exchanges to Chinese residents.
“This means domestic investors cannot legally purchase or trade Bitcoin ETFs or any crypto-linked products,” Xiao Sa emphasized. “Despite global developments, the core regulatory stance hasn’t shifted.”
Is a New Bull Market Beginning?
With momentum building, many wonder: Is this the start of a sustained bull run?
Analysts at Dongwu Securities identify three potential tailwinds for 2024:
- The Bitcoin halving
- Growing activity within the Bitcoin ecosystem (e.g., BRC-20 tokens, Ordinals)
- Continued expectations of Fed rate cuts
Historically, halvings have tightened supply at a time when demand continues to grow — often leading to upward price pressure. However, experts warn against overreliance on past patterns.
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Can History Repeat Itself?
“While halvings have acted as catalysts before, each cycle occurs in a different context,” Yu Jianning cautioned. “Today’s market is more mature, with greater institutional participation, complex derivative instruments, and evolving regulations. Relying solely on historical trends risks overlooking critical variables.”
Other factors now play a larger role:
- Macroeconomic conditions (inflation, interest rates, geopolitical tensions)
- Technological innovation (layer-2 solutions, wallet security)
- Regulatory clarity (or lack thereof) across major economies
Zhao Wei from OKX Institute noted that uncertainty persists: “The crypto market still faces headwinds — including macro volatility, potential ‘black swan’ events like exchange failures, and unclear regulatory frameworks.”
Key Risks Investors Shouldn’t Ignore
Despite optimistic narratives, several risks remain:
“Volatility is inherent in finance — and crypto is no exception,” Zhao said.
1. Regulatory Uncertainty
Governments worldwide are still formulating approaches to digital assets. Any new crackdown — especially in major economies — could trigger sharp sell-offs.
2. Security Vulnerabilities
Exchanges and digital wallets remain targets for hackers. High-profile breaches in past cycles have led to billions in losses.
3. Market Manipulation & Leverage Risks
Highly leveraged positions can amplify both gains and losses. Rapid price swings may lead to cascading liquidations, destabilizing short-term sentiment.
4. Macro Sensitivity
Bitcoin is increasingly correlated with tech stocks and broader risk assets. A shift toward tighter monetary policy could dampen investor appetite.
The Road Ahead: From Speculation to Real-World Utility
Long-term sustainability will depend on whether digital assets can move beyond speculation and deliver tangible value.
“True innovation lies in solving real-world problems,” Yu Jianning said. “The most successful digital assets have done so by integrating blockchain technology into supply chains, finance, identity management, and more.”
Future growth should be driven by:
- Digital technology innovation
- Business model evolution
- Expansion of practical applications
Only when crypto serves broader economic needs will it achieve mainstream adoption.
Frequently Asked Questions (FAQ)
Q: What caused Bitcoin’s recent price surge?
A: A mix of factors including U.S. Bitcoin spot ETF approvals, growing institutional interest, anticipation of the 2024 halving event, and improving macroeconomic outlook.
Q: Does an ETF approval mean Bitcoin is now regulated or safe?
A: No. ETF approval allows regulated investment access but does not imply government endorsement of Bitcoin itself. The asset remains highly volatile and speculative.
Q: Can Chinese investors buy Bitcoin ETFs?
A: No. Under current regulations in mainland China, all cryptocurrency-related financial activities — including purchasing foreign ETFs — are considered illegal.
Q: Will the halving definitely lead to higher prices?
A: Not guaranteed. While past halvings were followed by bull markets, today’s more complex ecosystem means other factors like regulation and macro trends play bigger roles.
Q: How does leverage affect Bitcoin’s price?
A: High leverage can amplify price movements. Rapid rises may trigger forced liquidations of short positions, accelerating upward momentum — but also increasing crash risks.
Q: What’s the best way to invest safely in Bitcoin?
A: Focus on long-term holding (‘HODL’), use secure wallets, avoid excessive leverage, stay informed on regulations, and never invest more than you can afford to lose.
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