5 Things That Cause Bitcoin Rallies
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For newcomers to the crypto space, a common question is this: what exactly causes Bitcoin prices to rise?
When the world’s biggest cryptocurrency enjoys an unexpected rally, it’s often possible to pinpoint a specific reason behind bullish sentiment.
But sometimes, a multitude of factors means it’s impossible to single out what’s driving the market upward.
Here, we’ll explore five key things that lead to BTC rallies.
1. Demand Outstripping Supply
To begin with, it’s worth understanding how Bitcoin’s supply works.
The maximum number of BTC that’ll ever exist is capped at 21 million — but most of them are already in circulation.
When this blockchain first launched back in 2009, 50 BTC were being mined every 10 minutes. In under four years, 10.5 million coins had already been created.
But in November 2012, a rare event known as “the halving” took place. This permanently reduced the number of new BTC entering circulation by 50%.
Halvings take place every four years — and as this graph from BlackRock shows, it means there’s not much Bitcoin left to find between now and 2140.
As of April 2024, just 3.125 BTC is being mined every 10 minutes.
The issue of supply gets even more complicated when you look at how the 19.7 million BTC in existence has been distributed.
Estimates suggest up to four million coins could be lost forever, while a further 1.1 million are in wallets belonging to Bitcoin’s pseudonymous founder Satoshi Nakamoto.
So-called “whales,” early adopters who accrued vast amounts of BTC in its early days, collectively own an estimated 1.6 million coins.
Exchange-traded funds based on Bitcoin’s spot price hold a substantial chunk of coins on behalf of investors, who want exposure to BTC’s fluctuations without owning it directly.
Then you have companies like MicroStrategy that are racing to accrue as much Bitcoin as possible to hold in reserve — as well as governments sitting on vast amounts of crypto seized from criminal gangs.
All of this means that, out of 19.7 million BTC, only a small amount of coins are being actively traded — and that brings us to demand.
Let’s imagine that it’s a hot day and you’re desperate for a bottle of water. You come across a shop that has just one available. You’d be willing to pay a high price for it.
But if there were endless shops, each with a vast amount of water on sale, it’s likely a bottle would cost much less.
Constrained supply means Bitcoin often trades like that bottle of water on a hot day.
Just 450 new BTC a day are being created — but this isn’t keeping up with demand from ETFs, let alone the wider market.
As the chart above from WisdomTree shows, ETF issuers purchased 153,293.58 more BTC than was created in the first three months of 2024 alone.
Analysts have long argued that this will lead to upward pressure on prices.
2. Halving Mania
It’s important to stress that history doesn’t always repeat itself, but past halving events have often led to a substantial surge in BTC’s value — often 12 to 18 months later.
As the chart above shows, the world’s biggest cryptocurrency rallied by a staggering 5,428% in 2013, the year after the first halving in 2012.
July 2016’s halving delivered a 1,375% surge in 2017, while BTC jumped 305% in 2020 — following on from a halving in April of that year.
Given how Bitcoin has matured and prices have risen, dramatic leaps of many thousands of percent are incredibly unlikely now — but this digital asset still has the capability of doubling or trebling within a matter of months.
An important caveat here is that dizzying rises are often followed by crashing falls. When BTC hit a then all-time high close to $69,000 in November 2021, a punishing bear market followed — with prices dwindling to just $16,540 by the end of 2022.
3. The Stock Market
Here’s a fascinating fact for you: since 2012, Bitcoin has been the top-performing asset class nine times — and the worst performer three times. It’s never been somewhere in the middle.
At certain points in history, BTC has appeared to have a strong correlation with the stock market — and flagship indices such as the S&P 500.
When this happens, it means that a good day on the stock market will result in BTC going up too. Conversely, they’ll both end up falling in tandem.
A good example came in 2020, when the full enormity of the coronavirus pandemic became known. Both asset classes suffered punishing declines as the world went into lockdown — but rallied later in the year when the Federal Reserve embarked on an aggressive campaign of quantitative easing.
Traders and analysts alike pay close attention to Bitcoin’s price in dollars.
Milestones such as $50,000, $60,000 and $70,000 can end up becoming key psychological barriers — and meaningfully advancing past them can lead to higher prices.
BTC trading is best compared to an arm wrestle between bulls and bears — those who believe prices are going to rise, and those adamant that contractions lie ahead.
This cryptocurrency often ends up fluctuating within a very close range around these levels as pressure builds — leading to an outsized move one way or another when resistance breaks.
Nerves can also set in when Bitcoin is near to cracking a new all-time high — and typically, it can take a few attempts to smash through the glass ceiling.
5. Breaking News
Last but not least, unexpected developments can cause Bitcoin to rally.
BTC rose substantially after El Salvador’s President, Nayib Bukele, announced that his country planned to adopt Bitcoin as legal tender in 2021.
For a time, Elon Musk’s tweets also had the power to move markets — with a sudden 20% jump when he added #bitcoin to his bio.
There was also feverish excitement when Tesla confirmed in an SEC filing that it was snapping up $1.5 billion in BTC for its balance sheet.
Of course, out-of-the-blue events can cut both ways — with Musk also sending the market downward when he announced the electric vehicle manufacturer would no longer accept Bitcoin as a payment method.
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Anatol Antonovici 
Ihssan El Medkouri 
Camila Karam