Bitcoin hits a new high, and four major factors may become the

The Chief Investment Officer of Bitwise believes that the market has underestimated the scale of the current bull market in the cryptocurrency sector and overlooked some specific driving factors.

Author: Matt Hougan, Chief Investment Officer of Bitwise

Translators: Saoirse, Foresight News

There are indeed many promising developments in the current cryptocurrency sector: regulation and legislation continue to improve, stablecoins are gaining momentum, corporate cryptocurrency purchases are surging, institutions are steadily incorporating cryptocurrencies into their investment portfolios through ETFs, and Ethereum has regained vitality, injecting much-needed altcoin momentum into the entire cryptocurrency market.

However, these situations are already open secrets. I always feel that the market has underestimated the scale of each progress, but this does not mean they are happening without anyone's attention. Media reports on the cryptocurrency bull market have long been overwhelming.

Nevertheless, I believe that by the end of this year, the market will still usher in a series of major upward surprises, strong enough to push prices significantly higher. The following four important developments, in my opinion, have not yet been reflected in current market pricing.

1. More governments will buy Bitcoin this year

At the beginning of 2025, the market generally believed that the three major sources of demand for Bitcoin this year would be ETFs, enterprises, and governments, which we call the "three carriages of Bitcoin demand".

So far, two of these carriages have gained momentum: ETFs have purchased 183,126 Bitcoins, and listed companies have snapped up 354,744. Given that the Bitcoin network only produces 100,697 Bitcoins, this has already driven its price up by 27.1%.

But the third carriage has not really exerted its strength. It is true that the United States has established a "strategic Bitcoin reserve", but it only contains Bitcoins obtained through criminal confiscation; Pakistan announced the establishment of its own Bitcoin reserve, and Abu Dhabi invested in Bitcoin ETFs, but compared with the large-scale purchases by ETFs and enterprises, these are only sporadic moves.

The market generally believes that the process of various countries adopting Bitcoin as a reserve asset has been shelved, but I doubt this. Although governments and central banks move slowly, according to discussions we have had at Bitwise, they are indeed advancing.

To be clear: I do not think there will be a盛况 of concentrated official announcements by various countries before the end of the year, but it is certain that more countries will join, and the number is sufficient to make this trend a major potential driver in 2026. This alone may significantly push up prices.

2. A weaker US dollar + lower interest rates = rising Bitcoin prices

One of the unique aspects of the current situation is that Bitcoin prices are approaching historical highs, while interest rates are hovering near their peak since Bitcoin was born in 2009. This should not have happened. For non-yielding assets such as Bitcoin (and gold), high interest rates are undoubtedly a major challenge, as they significantly raise the opportunity cost threshold for holding such assets.

The market has been pricing in expectations of multiple interest rate cuts before the end of the year, which should have supported Bitcoin. But I think the market has overlooked a key development with more far-reaching implications.

The Trump administration strongly wants a weaker US dollar and hopes that the Federal Reserve will adopt a more accommodative policy. From directly criticizing Federal Reserve Chairman Jerome Powell to appointing Stephen Miran, who advocates a weaker dollar, to the Federal Reserve Board, this series of moves strongly signal that the government wants significant interest rate cuts and a substantial depreciation of the dollar.

Not three rate cuts, but possibly six, or even eight.

Of particular note is the appointment of Miran. Miran has attracted widespread attention for his research paper, which argues that the dollar's status as the world's reserve currency imposes a heavy burden on the United States. He called for a new "Mar-a-Lago Agreement" to lower the dollar's exchange rate relative to other major international currencies and suggested that the Federal Reserve could achieve this by printing a large amount of money.

If large-scale money printing leads to a significant drop in interest rates and a sharp depreciation of the dollar, Bitcoin prices may rise significantly.

3. Lower volatility means higher allocation ratios

One of the most underestimated trends in the cryptocurrency sector is the significant decline in Bitcoin's volatility. Since the launch of spot Bitcoin ETFs in January 2024, not only has Bitcoin's own volatility decreased significantly, but the rate of change in its volatility has also slowed sharply.

Bitcoin's 30-day rolling volatility

(Source: Bitwise Asset Management, based on Coin Metrics data; Time range: December 31, 2012 to August 10, 2025)

Note: The green shaded area is the period after the launch of spot Bitcoin ETFs

The reasons for the decline in volatility are not difficult to understand: the development of ETFs and corporate cryptocurrency purchases have introduced new types of buyers into the cryptocurrency market, and progress in regulation and legislation has also significantly reduced market risks. I believe this is already the "new normal" for Bitcoin, with its volatility now roughly comparable to that of high-volatility technology stocks such as NVIDIA.

Comparison of volatility between Bitcoin, Tesla, NVIDIA, and Meta

(One-year rolling annualized volatility; Source: Bitwise Asset Management, based on Bloomberg data; Time range: December 31, 2019 to June 30, 2025)

In communications with institutional investors, this decline in volatility is prompting them to significantly increase their consideration of the allocation ratio of cryptocurrencies in investment portfolios compared to the past. Before the launch of spot Bitcoin ETFs, the initial ratio in such discussions basically started at 1%, but now, I frequently hear discussions starting with 5% or even higher ratios.

This is also one of the important reasons for the accelerated inflow of funds into Bitcoin ETFs. Since July 1, the net inflow of funds has reached $5.6 billion, and at this rate, the annual inflow scale will be close to $50 billion. It is worth noting that summer has always been a slack season for ETF fund inflows, and this fact makes me believe that this trend is likely to accelerate further in the autumn.

4. ICO 2.0: The rebirth of cryptocurrency financing

Initial Coin Offerings (ICOs) have become notorious. In 2018, fraudulent ICOs were rampant. Such empty projects raised billions of dollars from investors and then absconded with the money, and the promised products were never delivered, which was also an important reason for the abrupt end of the 2017 cryptocurrency bull market. The US SEC then launched a crackdown, and investors were completely tired of such fraudulent practices.

I think most investors and observers have regarded ICOs as "defective products", but SEC Chairman Paul Atkins outlined a blueprint for the rebirth of ICOs in his recent speech on the "Cryptocurrency Plan":

"I have asked the team to formulate information disclosure rules, exemptions, and safe harbor systems suitable for the characteristics of so-called 'initial coin offerings', 'airdrops', and 'network rewards'... In my opinion, if we can adhere to this path, the field of innovation may usher in a 'Cambrian explosion'."

If this vision is realized, it may become an important catalyst for driving the market upward. Looking back at history, whether during the ICO boom or after the downturn, cryptocurrency investors' enthusiasm for investing in crypto projects has never diminished. Once the new ICO market 2.0 is launched, it is expected to attract a large amount of new funds to the cryptocurrency market.

Conclusion

The market will not rise due to known positive news, but only due to positive news that has not yet been reflected in prices.

I believe that, overall, the market has underestimated the scale of the current bull market in the cryptocurrency sector and overlooked some specific driving factors, which will gradually show their influence in the coming months and even years.

Be wary of subsequent sharp price surges.

Disclaimer: The views in this article only represent the author's personal opinions and do not constitute investment advice for this platform. This platform does not guarantee the accuracy, completeness, originality, and timeliness of the information in the article, nor does it bear any responsibility for any losses caused by the use or reliance on the information in the article.