What factors have driven Bitcoin’s price to an all-time high above $125,000 and a market capitalization around $2.5 trillion?
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Correct Answer
A combination of strong institutional demand via spot ETFs, tightening supply as ETF inflows outpaced miner issuance, favorable macroeconomic shifts (such as Federal Reserve rate cuts and a weakening dollar), and risk‐off sentiment driven by market volatility (e.g., the US government shutdown) has pushed Bitcoin above $125,000 and lifted its market cap to around $2.5 trillion.
Why is this the correct answer?
This is correct because when large institutions buy Bitcoin through ETFs, they lock up coins and reduce available supply. At the same time, macro factors like interest rate cuts and a weaker dollar make risk assets such as Bitcoin more attractive, and market uncertainty (like a government shutdown) drives investors into alternatives. Together, higher demand and tighter supply naturally drive price and market capitalization higher.