Recently, I noticed a very interesting phenomenon: many people ask me why Bitcoin’s price fluctuations are so large. Indeed, from the lows a year and more ago to its performance today, this market cycle reflects the complexity of the cryptocurrency market.

First, the most straightforward point is that Bitcoin’s supply itself has an upper limit: there are only 21 million coins in total, and this is a rule written into the code. In the past, 900 coins were added every day, but starting in April 2024, the halving reduced this to 450 coins. The supply side is constrained, while demand continues to grow—this is the basis for the rally.

More importantly, the market structure is changing. Starting in early 2024, Bitcoin-related ETFs were gradually launched, bringing the total to 11. What does this mean? It means institutional capital can enter more conveniently, and the boundaries between traditional finance and the crypto market are blurring. Ordinary investors can also participate more easily. Liquidity has increased significantly, and market confidence has followed suit.

From the perspective of the reasons behind cryptocurrency price rises and falls, market sentiment accounts for a large share. When the economy is unstable and traditional finance is turbulent, a decentralized asset like Bitcoin is instead seen as a safe-haven tool. Both wealthy individuals and institutions have begun allocating part of their assets here, and demand on the buy side keeps rising.

But I’ve also noticed that cryptocurrency price fluctuations are not determined by a single factor. Policy changes, technological progress, mining dynamics, and the level of enthusiasm in global capital markets—all of these affect price movements. Take the regulatory stance, for example: looser regulation can push prices up, while tighter regulation creates downward pressure in return. The recovery or contraction of computing power also can have a major impact on prices in the short and medium term.

To be honest, there is no fixed pattern in the rules governing cryptocurrency price movements. These factors interact with each other: sometimes they reinforce one another, and sometimes they offset each other. After observing the market for so long myself, my deepest feeling is that Bitcoin’s price volatility is indeed large, but there is logic behind it.

If you want to participate in this market, my advice is to stay rational. Closely track key variables such as supply halving, the degree of institutional participation, and policy developments—don’t let short-term sentiment carry you away. Cryptocurrency price fluctuations come with risks. The correct attitude is to fully understand these risks and make decisions based on your own risk tolerance. On Gate, you can track this data and market trends in real time. If you’re interested, you can check it out for yourself.