Bitcoin Hits $108K: Amidst a surge to a record high of $108,000, Bitcoin has sparked intense speculation in the financial and cryptocurrency circles. The leading cryptocurrency is entering uncharted territory, and its trajectory reveals more than just a bullish sentiment. It also suggests that a structural shift is underway, driven by supply-side dynamics. The market’s current state isn’t just due to sudden increases in demand; it’s also a result of developing scarcity that’s making coins harder to obtain. Many experts believe that this persistent lack of Bitcoin supply is setting the stage for a possible dramatic breakout.

Investors, institutions, and long-term holders are keeping a careful eye on the macro and on-chain fundamentals because they can see this psychological barrier coming. The signs point to a significant shift in how prices move, from exchange reserves hitting all-time lows to whale wallets growing rapidly.

Bitcoin Supply Squeeze

To understand how Bitcoin is moving right now, you need to know how its fixed supply affects its economy. Satoshi Nakamoto, the pseudonymous founder of Bitcoin, put a limit of 21 million on the total amount of bitcoins that can ever exist. Mining has hit 19.7 million bitcoins, according to Glassnode and IntoTheBlock. More than 70% of these bitcoins are in dormant wallets or are maintained by long-term holders (LTHs).

The Bitcoin supply drought is not a temporary phenomenon; it is occurring on centralized exchanges like Binance, Coinbase, and Kraken. It is a consequence of several factors, including increased demand from institutional purchasers, the adoption of cryptocurrencies by more countries (especially El Salvador and Argentina), and a growing number of people holding their coins following the FTX collapse.

At the same time, ETFs like BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity’s Wise Origin Bitcoin Fund (FBTC) have amassed billions in assets under management (AUM), acquiring new coins more quickly than miners can produce them. This rapid outflow on-chain is making things appear scarce, which in turn reduces liquidity and increases price volatility.

Bitcoin Investment Rises Amid Economic Shifts

Whales, or large investors, have returned to the market with increased confidence. Over the past three months, the number of wallets holding more than 1,000 BTC has increased significantly. Hedge funds, pensions, and corporate treasuries are investing more money in institutional-grade custodians, such as Bakkt, BitGo, and Coinbase Prime.

What is causing this comeback? Some of it is due to the weak U.S. dollar index (DXY) and the overall economic uncertainty. Because the Federal Reserve’s tone is dovish and interest rates are likely to decrease, people are shifting their money from traditional safe havens, such as gold, to digital assets. Additionally, an increasing number of people view Bitcoin as “digital gold,” a means to safeguard against both inflation and the erosion of cash value.

Additionally, the broader story of blockchain-based assets as part of modern portfolio theory (MPT) is gaining popularity. As Bitcoin’s connection with stocks wanes and its volatility begins to stabilize, asset allocators view it as a unique, high-reward asset class.

Key Indicators Signal Bullish Momentum for Bitcoin

Upon closer examination of blockchain analytics, several key indicators support a bullish setup for Bitcoin. The realised cap, which shows the price at which each coin last moved, is continuously increasing, indicating that new purchasers are entering at higher prices. The MVRV (Market Value to Realized Value) ratio remains in a healthy range, indicating that the asset isn’t yet in the exuberant overvaluation zone.

There is also considerable activity on the network. The hashrate, which indicates the amount of computing power required to keep the network secure, has reached all-time highs. This is a good indicator of miners’ trust. At the same time, an increasing number of people are utilizing the Lightning Network, which enables faster and cheaper transactions, as well as opens up new avenues for Bitcoin usage in emerging countries and remittance corridors.

Halving Cycles and Historical Parallels

Examining Bitcoin’s past performance can help us predict its future direction. In the past, significant rallies have occurred after halving events, which take place every four years when the block reward for miners is halved. The last halving occurred in May 2024, reducing the rewards for each block from 6.25 BTC to 3.125 BTC.

If history repeats itself, as it often does in crypto cycles, Bitcoin’s breakout after the halving may still be in its early stages. In 2020, BTC went from $9,000 to more than $64,000 in a year following the halving. Given the current situation, which combines institutional involvement, more explicit rules, and a demand for ETFs, an exponential move is possible.

Bitcoin’s Rise Amid Global Turmoil and Optimism

Global financial events also impact how Bitcoin’s price fluctuates. New capital controls in Argentina and China have led to increased demand for goods and services. Political problems in the Middle East and concerns about inflation in Europe have strengthened Bitcoin’s narrative as a global hedge against economic instability.

Central bank digital currency (CBDCs) are gaining popularity but have drawn ire for being trackable and programmable. Bitcoin is an alternative. The concept of self-sovereign money is more appealing than ever, particularly in regions where autocracy or hyperinflation prevail.

FOMO and Market Psychology Risk Sentiment analysis platforms, such as Santiment and CryptoQuant, indicate that the market is moderately greedy. Retail traders are starting to return, but institutional positioning remains the most crucial factor. This means that we are in the “acceptance” phase of the current bull cycle. As Bitcoin reaches new records, there is a chance that a “FOMO” (Fear of Missing Out) wave will happen soon.

People are feeling more hopeful again about social media sites like Reddit, Twitter (now X), and Telegram. Michael Saylor, Cathie Wood, and Raoul Pal are all predicting that prices will exceed $150,000, but with so many people optimistic about the market, skeptics are being drowned out.

The Future of Regulation and the Speeding Up of ETFs

The regulatory thaw in the US is another reason why Bitcoin is expected to rise to $108,000. The U.S. Securities and Exchange Commission (SEC) gave the green light to identify Bitcoin ETFs in early 2024, allowing a significant amount of institutional money to flow into the market. Like Canada and Europe, the U.S. made Bitcoin legal from the perspective of wary investors.

At the same time, countries like the UAE, Singapore, and Switzerland are making their tax and regulatory systems more friendly to crypto riches. This adds to the story of global liquidity. This evolving compliance landscape is transforming Bitcoin from a niche asset into a pivotal component of the world’s capital markets.

Can Bitcoin stay above $108,000?

The question now is whether Bitcoin can stay above $108,000 and build on that, or if we’ll see a healthy pullback before the next leg up. Experts say that a short-term decline is likely, mainly if excessive speculation occurs too rapidly. Due to objective statistics, strong fundamentals, and unprecedented demand, the long-term trend is expected to be higher.

As Bitcoin’s circulating supply becomes increasingly scarce, the stage is set for prices to rise more rapidly. A large market order might trigger a chain reaction of limit order executions, which could drive the price up and potentially push Bitcoin beyond $120,000.