Deutsche Bank analyzes the five driving forces behind the surge in Bitcoin: favourable policies and institutional adoption make a strong push.

1. The U.S. policy direction is warming up, with political support as a driving force The rise of Bitcoin has received policy support from Washington. The U.S. House of Representatives launched "Crypto Week" this week, with three key bills set to be voted on, including the "CLARITY Act" (Clear Crypto Market Framework), the "GENIUS Act" (Stablecoin Regulation), and the "Anti-CBDC Regulatory National Act" (Prohibiting the Federal Reserve from issuing Central Bank Digital Currency to individuals). The Trump administration also demonstrated a strong pro-crypto stance by announcing the establishment of a "Bitcoin Strategic Reserve" and a "Digital Asset Reserve," and set up a crypto task force at the U.S. Securities and Exchange Commission (SEC). At the same time, the European MiCA regulation has officially come into effect, and the UK and China are also exploring regulatory mechanisms for stablecoins. The legalization of policies is accelerating institutions' acceptance of Bitcoin.

2. Bitcoin ETF approved, funds inflow exceeds $50 billion The U.S. Securities and Exchange Commission approved the Bitcoin spot ETF in early 2024, a turning point that greatly boosted market confidence. According to Deutsche Bank statistics, since the ETF approval, over $50 billion has flowed into Bitcoin-related ETFs. The liquidity increase and price stability improvement brought by ETFs, combined with the Bitcoin halving event in April 2024, have jointly driven the optimization of the supply and demand structure. The current structural scarcity is one of the core logics supporting the upward trend of Bitcoin prices.

3. Adoption Rate Increase, Enterprises and Individuals Accelerate Entry Data from Deutsche Bank shows that as of June, 17% of retail investors in the US hold Bitcoin. The adoption on the corporate side is equally rapid, with about 31% of circulating Bitcoin being held long-term by corporate finance departments. Ripple (RLUSD-USD) and Circle (CRCL) have even applied for national bank charters, intending to penetrate the traditional financial system in the US. An increasing number of traditional companies are also joining the ranks of Bitcoin, including the American meat company Beck & Bulow and Japan's Metaplanet, which are using Bitcoin to hedge against inflation and the devaluation of the dollar.

4. Macroeconomic factors drive risk-averse demand, Bitcoin becomes digital gold The US dollar index (DX-Y.NYB) has fallen nearly 10% this year, with the expanding US fiscal deficit and new tax policies further undermining investor confidence in the dollar. Bitcoin and gold (GC=F), as alternative stores of value, have attracted more safe-haven funds. Across the globe, from China to the Czech Republic, countries are re-evaluating their holdings of US debt; countries like Ukraine are even starting to explore the possibility of using Bitcoin as a reserve asset. As trust in fiat currencies declines, Bitcoin is being seen as a "digital safe haven."

5. Upgrade of Technical Infrastructure, Smoother Entry for Institutions In the past year, Bitcoin infrastructure has undergone significant upgrades. Updates to the core protocol and the popularization of Layer 2 solutions like the Lightning Network have greatly improved scalability and transaction efficiency. At the same time, traditional financial institutions such as BNY Mellon and State Street (STT) have also launched more robust crypto asset custody services, lowering the entry barriers for institutions. Deutsche Bank believes this will accelerate the adoption of Bitcoin among a broader range of institutional users, further enhancing its legitimacy and price performance.