4 Catalysts That Caused Bitcoin to Hit Its Highest Price Yet

Bitcoin's (CRYPTO: BTC) price is a bit less than $110,000 per coin as of this writing, right near its all-time high, and right in the midst of what might be a generational bull run for the asset. There's a solid chance it could keep powering on higher and higher over the coming quarters. But this favorable setup isn't the result of chance, nor is it (yet) the result of a binge on speculative purchasing.

Instead, there are four key catalysts that helped Bitcoin to get where it is right now. And they will stay in play too, which means they could keep driving the price up. Let's take a look at each to understand them a bit better.

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1. The halving last year

Bitcoin undergoes a halving roughly every four years, the most recent of which happened in April 2024.

The halving is perhaps the single most important catalyst for the coin because it determines the reward that miners get when they successfully mine a new block. After the halving, the supply of newly produced Bitcoin is cut in half. That almost always leads to a supply shock wherein the amount of the coin in regular circulation becomes tightly constrained relative to demand from buyers.

Image source: Getty Images.

In other words, halvings are one of the main mechanisms by which the coin's price can be expected to rise over time, and the price is currently getting sharply pushed up by the impact of the last one. The next halving is slated for April 2028, so plan accordingly.

2. Public and private adoption of Bitcoin

Right now is a golden age of all kinds of investors with deep pockets buying or resolving to hold Bitcoin. Whenever one of them announces their intentions, it's a catalyst for the asset.

Take, for instance, the Strategic Bitcoin Reserve, which, if implemented, would make the U.S. government into an entity with a policy of retaining the coin over the long term rather than selling it. Other countries are debating whether to implement similar policies.

States like Texas and even some cities are also considering and going through the political process to initiate new Bitcoin reserves of their own. States like North Carolina are debating bills that would allow for public pension funds to be partially invested in the asset. And New York City is at least thinking about whether a municipal reserve fund would make sense.

Furthermore, other institutional investors like major banks are adding the coin to their balance sheets, both for holding and for offering services to their clients.

And between all of the players above competing to buy more coins, it's no surprise that the price is higher than before.

3. The global movement toward hard money

Amid the trend of broadening adoption of the coin, there's a parallel catalyst that's just as strong: the desire for stores of value that can't be eroded by inflation in the same way as fiat currency.

Consider that for a fiat currency, such as the U.S. dollar, the circulating supply only shows a trend toward increasing over time. Therefore the purchasing power per unit of currency tends to decline over time. And, in the aftermath of the inflation of the past few years, investors are extremely sensitive to those facts.

For Bitcoin, the reverse situation is true. The circulating supply only gets tighter due to the halvings. That means it's a logical place for investors to park their value to avoid having it get eroded by inflation. Other assets that fill the same role, like gold, have also been popular places to store value.

These trends aren't about to lose steam.

4. Hype driven by famous buyers

Like it or not, people tend to react positively when there's a well-known evangelist for an asset. Bitcoin has quite a few of those.

Take for instance Strategy's founder Michael Saylor, who simply can't seem to stop buying hundreds of millions of dollars worth of Bitcoin on a weekly basis. Strategy owns about $59 billion of the coin, and Saylor has resolved to never sell it unless absolutely necessary to preserve his company.

So that means he's going to be talking his book to the public as frequently as possible for as long as it's possible to do so. That generates more enthusiasm for the coin, and it might even attract a few new holders along the way. And while it isn't as strong a catalyst as the others I've mentioned here, it's still a relevant factor that's driving the price of the coin higher and higher over time.

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Alex Carchidi has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.