Analysis: The main reasons for Bitcoin's rise are 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 6th, Ryan Rasmussen, Head of Research at Bitwise, stated, “Wall Street’s explanation for Bitcoin’s approximately 5% increase is: Venezuela’s oil reserves are released, oil prices decline, inflation decreases, interest rates fall, 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 factors driving Bitcoin’s price up by over 5% are as follows: · 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. With major platforms like Morgan Stanley, Wells Fargo, and Bank of America’s Merrill Lynch starting to allocate assets (for example, approximately $500 million net inflow into Bitcoin ETFs on January 2nd), institutional participation is significantly increasing. · Shift in Crypto Regulation (Positive for Bitcoin): As a crypto-friendly regulatory direction gradually takes shape after the 2024 elections, the crypto industry will begin to feel the benefits of policy shifts. Wall Street institutions, including wealth management firms, university endowments, pension funds, and sovereign wealth funds, are starting to allocate more seriously and systematically to Bitcoin. · 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 has not substantively changed 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 event this weekend has had some impact on Bitcoin, but it is not the main reason for Bitcoin’s approximately 5% increase.”