Bitcoin on the rise: what drives the price increase before the halving?

Bitcoin, the most popular cryptocurrency in the world, is currently experiencing a period of growth and interest. In the last 24 hours, the price of Bitcoin has risen by over 10 percent, reaching a level of over $54,000. What is behind this phenomenon and what does it mean for the future of Bitcoin? Explosion of demand for Bitcoin One of the main factors driving the increase in the price of Bitcoin is the growing demand for this cryptocurrency from institutional and retail investors. Among them are spot ETF funds, which buy large amounts of Bitcoin on exchanges and store them in secure wallets. Spot ETF funds are funds that track the price of Bitcoin and allow investors easy access to this market without the need to own physical Bitcoins. According to data from [CoinShares], European spot ETF funds have increased their assets under management to a record level of over $6 billion, representing a 66 percent increase in the last three months. The largest of these is the Grayscale Bitcoin Trust fund, which holds over 650,000 bitcoins worth over $35 billion. The Grayscale Bitcoin Trust is available on the US OTC exchange and is one of the most popular ways for institutional investors to invest in Bitcoin. It's not just ETF funds that are interested in Bitcoin. More and more companies and individuals are choosing to buy and hold Bitcoin as a form of savings and protection against inflation. Among them are well-known names such as Tesla, MicroStrategy, Square, PayPal, and Twitter. According to [Bitcoin Treasuries], over 40 public and private companies collectively hold over 1.3 million bitcoins worth over $70 billion. Bitcoin halving on the horizon Another factor influencing the price of Bitcoin is the upcoming halving, which is the phenomenon of cutting the reward for mining a new block in the Bitcoin network in half. Halving occurs every 210,000 blocks, roughly every four years. This is a mechanism designed by Bitcoin's creator, Satoshi Nakamoto, to control the pace of new Bitcoin issuance and maintain a limited supply of 21 million. Bitcoin halving affects the supply-demand dynamics of the market because it reduces the amount of new Bitcoins entering circulation, thereby increasing their scarcity. Furthermore, halving affects the profitability of Bitcoin mining because miners receive fewer Bitcoins for their work. This, in turn, can lead to a decrease in the computational power in the network and a longer time needed to mine a new block. Bitcoin halving is considered one of the most important events in the history of the cryptocurrency because it affects its value and future. Historically, Bitcoin halving has preceded a period of price growth and increased market activity. For example, after the first halving in 2012, the price of Bitcoin rose from around $12 to over $1,000 within a year. Similarly, after the second halving in 2016, the price of Bitcoin rose from around $650 to over $19,000 in a year and a half. Of course, there is no guarantee that history will repeat itself and that Bitcoin halving will result in a similar price increase. Much depends on other factors such as demand, supply, regulations, innovations, competition, and market sentiment. Nevertheless, Bitcoin halving is an event that attracts the attention and speculation of many investors and cryptocurrency market observers. Summary Bitcoin is a cryptocurrency that is gaining popularity and value due to the growing demand from institutional and retail investors, including spot ETF funds. At the same time, Bitcoin is approaching halving, which is the halving of the reward for mining a new block. Halving affects the supply and profitability of Bitcoin, as well as its price and future.