Analysis: The main reason for Bitcoin's rise is not influenced by the Venezuela incident, but rather driven by institutional adoption, a shift in crypto regulation, and a rebound in risk appetite.

On January 6, Ryan Rasmussen, Head of Research at Bitwise, stated, "The Wall Street explanation for Bitcoin's approximately 5% increase is: Venezuela's oil reserves were released, oil prices declined, inflation decreased, interest rates fell, leading to Bitcoin's rise. However, this logic is flawed. In the short term, the probability of rate cuts remains essentially unchanged compared to last week, even looking ahead to the end of 2026, after Maduro's arrest, the expectation of rate cuts remains intact. Since Maduro's arrest, the factors driving Bitcoin's price up by over 5% include:
· Institutional adoption (positive for Bitcoin): Since the launch of spot Bitcoin ETFs in 2024, institutional funds have continued to flow into the crypto market, and this trend is accelerating. Major platforms like Morgan Stanley, Wells Fargo, and Bank of America’s Merrill Lynch have begun asset allocation (for example, on January 2, a single-day net inflow of about $500 million into Bitcoin ETFs), significantly increasing institutional participation.
· Optimism about AI (positive for risk assets): Concerns about an AI bubble are easing. Investor sentiment is turning optimistic, with funds flowing back into risk-on assets such as tech stocks and Bitcoin.
· Unchanged rate cut expectations (positive for risk assets): Maduro's arrest did not materially change short-term rate cut expectations, nor does it mean that quantitative easing (QE) has been ruled out; QE has just begun. The market previously, and still expects, a 50 basis point (or more) rate cut by 2026.
The Venezuela incident this weekend had some impact on Bitcoin, but it is not the main reason for the approximately 5% increase in Bitcoin."$SOL