Bitcoin Breaks $100,000 — A Cycle of History or a New Era?

In May 2025, Bitcoin surged through the $100,000 mark with a bang, sparking a whirlwind of celebration and skepticism in the market.

This number is not just a milestone in price; it is a mirror reflecting the madness, crashes, and rebirths of the cryptocurrency market over more than a decade.

History has a way of repeating itself — in 2017, Bitcoin hit $20,000 for the first time before plunging by 84%; in 2021, it soared to $69,000 amid institutional frenzy, only to be cut in half by tightening policies. Now, as Bitcoin once again reaches a six-figure high, people can't help but ask: Is it really different this time?

The answer may lie in the structural changes of the market.

Unlike previous bull runs dominated by retail investors, the 2025 bull market is driven by Wall Street whales — MicroStrategy holds over 440,000 bitcoins, worth more than $44 billion, and the total net asset value of Bitcoin spot ETFs has exceeded $110 billion.

More critically, the policy winds have shifted: New Hampshire and Arizona in the United States have successively included Bitcoin in their government reserve assets, and the Trump administration is even mulling a national Bitcoin reserve plan.

These signals suggest that Bitcoin is transforming from a "speculative toy" into a "strategic asset."

But shadows still lurk. In February 2025, Bitcoin plummeted by 6.83% within 24 hours, causing 720,000 people to be liquidated for $2.2 billion; in early May, after breaking through $100,000, it saw $1.1 billion evaporate in a day due to leveraged liquidations.

High leverage, seasonal corrections (such as the "sell in May" effect), and the uncertainty of Federal Reserve policies remain the Damocles' swords hanging over the market.

Bitcoin's Historical Cycles — From Mania to Crash

The price volatility of Bitcoin is nothing short of an epic of "booms and busts" in the financial market.

Every time it breaks through a key psychological price level, market sentiment swings to extremes — from euphoria to panic, from faith to skepticism.

In May 2025, Bitcoin hit the $100,000 mark, but will history repeat itself? To answer this question, we need to look back at Bitcoin's previous two major bull markets and the logic behind their crashes.

1. 2017: Retail Mania and Bubble Burst

In 2017, Bitcoin broke through $10,000 for the first time and soared to nearly $20,000 in December of the same year. The driving force behind this bull run was the frenzy of retail investors.

The ICO (Initial Coin Offering) boom swept the globe, with a flood of speculative capital pouring into the cryptocurrency market, pushing Bitcoin's price up nearly 20 times in a year.

However, the party didn't last long.

In early 2018, China, South Korea, and other countries introduced stringent cryptocurrency regulations, banning ICOs and shutting down domestic exchanges. Market liquidity dried up quickly, and Bitcoin's price plummeted by 70% in just two months, falling below $6,000.

The key lesson from this crash was that markets overly reliant on retail speculative sentiment are highly vulnerable to policy shocks.

2. 2021: Institutional Entry, but Unable to Escape Correction

In 2021, Bitcoin experienced its second super bull market, with its price surging from $30,000 at the beginning of the year to $69,000 in November. Unlike in 2017, the main driver this time was institutional investors.

MicroStrategy led the charge by buying large amounts of Bitcoin, holding over 120,000 BTC by the end of 2021, worth about $7 billion.

Tesla announced the purchase of $1.5 billion in Bitcoin and briefly accepted BTC payments for cars, further boosting market confidence. Bitcoin futures ETFs were also approved, providing a compliant investment channel for traditional financial markets.

However, the 2021 bull market also ended in a crash.

In 2022, the Federal Reserve began its interest rate hike cycle, tightening global liquidity, and Bitcoin's price halved to below $30,000 within six months. More critically, China banned Bitcoin mining altogether, causing a sharp drop in network hash rate and spreading panic in the market.

The core issue of this crash was that even with institutional capital support, Bitcoin could not completely escape the impact of macroeconomic policies.

3. 2024-2025: The New Bull Market Driven by Institutions?

In 2024, the Bitcoin market underwent structural changes. Unlike in 2017 and 2021, the driving force behind this bull run was no longer retail FOMO (Fear of Missing Out) but systematic allocation of institutional capital.

Bitcoin Spot ETFs Explode: In early 2024, the US SEC approved several Bitcoin spot ETFs. BlackRock's IBIT fund quickly grew to over $34 billion in size, surpassing gold ETFs (IAU) to become the most popular commodity ETF.

Corporate Buy-ins Continue: MicroStrategy's Bitcoin holdings have exceeded 440,000 BTC, worth over $44 billion, making it the largest Bitcoin "hoarder" globally.

Government and Sovereign Funds Enter: New Hampshire passed a bill allowing the state government to allocate up to 5% of its fiscal funds to Bitcoin, becoming the first "Bitcoin reserve state" in the US.

These changes indicate that the market structure of Bitcoin is shifting from "retail speculation" to "institutional asset allocation." But does this mean that Bitcoin has escaped the fate of "boom and bust"?

4. Historical Comparison: 2021 vs. 2025

From the comparison, it is clear that the market structure in 2025 is more robust but still faces high leverage and liquidity risks.

5. Conclusion: History Repeats Itself, but Never Exactly the Same Way

Each Bitcoin bull market is accompanied by a different market logic:

• 2017: Retail speculation-driven, easily shattered by policy.

• 2021: Institutional entry, but unable to withstand macroeconomic policy.

• 2025: Institution-led with policy support, but high leverage remains a hidden danger.

This time, Bitcoin may avoid a "crash-style correction," but violent fluctuations are still inevitable.

The real test lies in whether institutional investors will hold on long-term or cash out collectively when Federal Reserve policy shifts or market liquidity tightens.

New Variables in the 2025 Bull Market — Institutions, Policy, and Technological Change

Bitcoin's breakthrough to $100,000 in 2025 marks a fundamental change in market structure.

Unlike the retail frenzy in 2017 and the institutional trial in 2021, this bull market is driven by institutional capital, government policy, and technological upgrades. Can these new variables free Bitcoin from its "boom and bust" fate? We analyze from three key dimensions.

1. Policy Support: US State Government Bitcoin Reserve Experiments

In 2025, Bitcoin officially entered the fiscal system of US state governments, marking its transformation from a "speculative asset" to a "strategic reserve."

This trend began with the Trump administration's "Bitcoin Strategic Reserve Draft" in 2024 and saw a key breakthrough in May 2025 when New Hampshire passed the HB302 bill, becoming the first state to include Bitcoin in its fiscal reserves.

The bill allows the state government to invest up to 5% of public funds in Bitcoin, held through ETFs or secure custody solutions.

State-Level Reserve Landscape

• Texas: Proposed a Bitcoin reserve bill (SB 778) in January 2025, allowing the state to collect taxes in BTC and set up a dedicated Bitcoin strategic reserve fund.

• Utah: Passed the "Blockchain and Digital Innovation Amendment" in March 2025 but removed the key clause allowing a 5% fiscal investment in Bitcoin, missing the chance to be the first Bitcoin reserve state.

• Pennsylvania: Plans to allocate 10% of its general fund (about $1 billion) to Bitcoin, far exceeding other states.

Federal Policy Dynamics

The Trump administration signed an executive order in March 2025 to include 200,000 confiscated bitcoins (about $17 billion) in the national strategic reserve but has not yet made large-scale purchases.

In comparison, state government actions have been more groundbreaking — New Hampshire's proactive investment model may trigger a global sovereign reserve competition, with Brazil, El Salvador, and others already discussing similar plans.

Policy Impact Assessment:

• Short-term: State reserve plans boost market confidence, driving Bitcoin past $100,000.

• Long-term: If more states follow suit, Bitcoin could become the standard reserve asset for "digital gold," fundamentally changing its demand structure.

• Risks: Government sales (e.g., liquidating confiscated assets) or policy reversals (e.g., South Dakota's bill rejection) could cause market shocks.

2. Federal Reserve Rate Cuts and Global Liquidity Tides

In May 2025, Bitcoin's surge was highly correlated with expectations of Federal Reserve rate cuts.

Standard Chartered Bank predicted two rate cuts in 2025, driving capital into risk assets.

Historical data shows that Bitcoin's correlation with global M2 money supply is as high as 83%, with liquidity expansion cycles often being the core driver of bull markets.

Market Effects of Rate Cut Expectations

• Stock Market Linkage: In May 2025, Bitcoin and the Nasdaq index rose in tandem as institutional capital rotated among risk assets.

• Dollar Weakness: The Dollar Index returned to the 100 mark, pressuring gold, while Bitcoin gained favor due to its "inflation hedge" narrative.

• Leverage Heating Up: Exchange XBIT data showed that after Bitcoin broke $100,000, leveraged contract open interest surged, with 24-hour liquidations reaching $865 million.

Hazard of Liquidity-Driven Markets

Despite the rate cut being favorable for Bitcoin, the market still faces two major risks:

• Policy Reversal: If inflation rebounds, the Fed may delay rate cuts, tightening liquidity.

• Leverage Bubble: Bitcoin's current leverage ratio reached 0.2405 (annual peak), and violent price fluctuations could trigger a chain of liquidations.

3. Technological Upgrades: The Rise of BTCFi and Decentralized Finance

In 2025, Bitcoin is no longer just "digital gold"; its ecosystem is expanding into lending, staking, and derivatives through BTCFi (Bitcoin Finance).

Bitcoin DeFi Explosion

• TVL (Total Value Locked) Surge: Bitcoin's on-chain DeFi TVL soared from $320 million in 2024 to $6.7 billion in 2025, a 21-fold increase.

• Staking Economy: Through "Bitcoin staking," holders can lock BTC in smart contracts to earn returns with annual interest rates of 4%-8%.

• Decentralized Leverage: Exchanges like XBIT launched Bitcoin perpetual contracts, allowing users to control leverage through smart contracts, avoiding the risk of centralized exchange runaways.

Technological Upgrades and Market Structure Optimization

• AI Circuit Breakers: Some exchanges introduced algorithmic circuit breakers that automatically pause trading when price fluctuations exceed 5%, reducing flash crash risks.

• Institutional-Grade Custody: Coinbase and Fidelity launched Bitcoin custody solutions compliant with SEC requirements, lowering the threshold for institutional entry.

Technical Impact Assessment:

• Positive: BTCFi enhances Bitcoin's utility, attracting long-term capital.

• Negative: Smart contract vulnerabilities (e.g., the Bybit hack in February 2025) still threaten asset security.

Conclusion: Can New Variables Rewrite the Bitcoin Cycle?

The 2025 bull market is driven by policy endorsements, liquidity expansion, and technological innovation, fundamentally different from 2017 and 2021:

• More Robust Demand Structure: State government reserves and ETF capital inflows reduce selling pressure.

• Higher Volatility Ceiling: Leveraged trading and derivatives markets amplify price swings.

• More Complex Risk Portfolio: Policy uncertainty, technical vulnerabilities, and macroeconomic shocks coexist.

In the short term, Bitcoin may challenge $120,000 (Standard Chartered's target price), but the "sell in May" seasonal pattern and high leverage risks still need caution. In the long run, if state-level reserves become a global trend, Bitcoin's volatility may gradually decrease, truly becoming "digital gold for the modern age."

Potential Risks — High Leverage, Seasonal Corrections, and Black Swan Events

Behind the celebration of Bitcoin breaking $100,000, the market still harbors hidden dangers.

Although the 2025 bull market is driven by institutional capital and policy support, historical experience shows that high leverage, seasonal patterns, and sudden black swan events remain the core causes of violent price fluctuations in Bitcoin. Investors who ignore these risks may become casualties of the market's "double-edged sword."

1. High-Leverage Trading: The Hidden Bomb in a Bull Market

The leverage ratio in the Bitcoin market reached a historical peak in 2025, with exchange XBIT data showing that open interest in contracts exceeded $59 billion, over 60% of which were high-leverage positions (20x and above). This high-leverage environment amplifies market volatility, leading to the frequent occurrence of the abnormal phenomenon of "long liquidations during rallies":

Leverage Liquidation Vicious Cycle

• February 2025 Flash Crash: Bitcoin plunged from $110,000 to $83,000, with 170,000 investors liquidated in 24 hours, losing $676 million.

• April 2025 "Needle Poke": After breaking through $95,000, Bitcoin instantly dropped to $87,000, triggering the liquidation of 52,000 long positions, with a liquidation amount of $275 million.

The fatal problem with high-leverage trading is that a minor price correction can trigger a chain of liquidations.

For example, when Bitcoin falls by 5%, a long position using 20x leverage will lose all its margin, and the exchange's forced liquidation mechanism will further exacerbate selling pressure, creating a "trampling effect" of "longs killing longs."

Funding Rate Black Hole

During the bull market, the funding rate of perpetual contracts (interest paid by longs to shorts) can reach as high as 0.3%/day (109% annualized). This means that:

If an investor opens a 20x leverage long position and holds it for three days, even if the price rises, they will still need to pay 10% of their principal as funding costs.

In March 2025, some exchanges even saw a "rate war," with institutions manipulating contract funding rates to force retail longs to exit passively.

Leverage Risk Mitigation Strategies:

• Control Leverage Multiplier: Beginners should keep it ≤10x, and professional traders should keep it ≤20x.

• Dynamic Stop-Loss: Move the stop-loss line up in sync with every 5% price increase to avoid giving back profits.

2. Seasonal Corrections: Will the "Sell in May" Effect Come True?

The Bitcoin market exhibits a significant seasonal pattern, especially the cyclical phenomenon of "Sell in May and Go Away." Historical data shows:

• May 2017: Bitcoin corrected by 38%, entering a six-month consolidation period.

• May 2021: China's crackdown on mining caused Bitcoin's price to halve, falling from $64,000 to $30,000.

In May 2025, after Bitcoin broke through $100,000, market sentiment had already entered "extreme greed" (83/100), and seasonal patterns suggested that summer might bring adjustments.

Analyst Mikybull pointed out:

"Bitcoin usually performs strongly in Q1, but often enters a consolidation period in Q2-Q3. In 2025, it may retest the $80,000 support level."

Seasonal Risk Mitigation Strategies:

• Reduce Position Size: Adjust holdings to below 50% around May.

• Monitor Institutional Movements: If "whales" like MicroStrategy do not reduce their holdings, the correction may be limited.

3. Black Swan Events: Policy, Technology, and Macro Shocks

Despite the increased institutionalization of Bitcoin in 2025, sudden black swan events can still market logic.

Policy Risks: State Reserve Bill Variables

• South Dakota Rejects Bitcoin Reserve Bill: In March 2025, the state legislature's refusal to include Bitcoin in fiscal reserves warmed the market's risk-averse sentiment.

• Trump Policy Waver: Although the federal government plans to establish a Bitcoin strategic reserve, economic policies such as additional tariffs may weaken Bitcoin's "inflation hedge" narrative.

Technology Risks: Exchange Security and Hacking Attacks

• Bybit Exchange Hacked: In February 2025, hackers stole $1.5 billion in user assets, triggering a panic sell-off in the market.

• Smart Contract Vulnerabilities: With Bitcoin DeFi's TVL reaching $6.7 billion, some protocols still have code flaws. For example, the Bybit in early 2025 caused user losses of $320 million.

Macroeconomic Shocks: Liquidity Reversal Risks

• Fed Delays Rate Cuts: If US inflation rebounds, the Fed may maintain high interest rates, pressuring risk assets (including Bitcoin).

• Global Trade Conflicts: In March 2025, the US imposed tariffs on Canada and Mexico, causing Bitcoin and US stocks to fall in tandem, temporarily its safe-haven.

Black Swan Event Mitigation Strategies:

• Diversify Investments: Allocate to traditional safe-haven assets like gold and government bonds, reducing Bitcoin holdings.

• Monitor Regulatory Dynamics: Stay ahead of policy changes, such as the voting progress of state Bitcoin reserve bills.

Bitcoin's "Fragile Prosperity"

In 2025, the Bitcoin market is more resilient but still highly risky:

• Short-term (Q2-Q3 2025): High leverage liquidations and seasonal corrections may cause a 20%-30% drop, testing the $80,000 support level.

• Long-term (Post-2026): If institutional holdings exceed 60%, volatility may gradually decrease, but black swan events can still颠覆 trends.

For investors, Bitcoin in 2025 is both an opportunity and a perilous situation.

The risks in a bull market are often the deadliest — only by rationally controlling leverage, being vigilant about seasonal patterns, and guarding against policy shifts can one survive the digital asset frenzy.

Future Outlook — Bitcoin's Ultimate Destiny and Value Game

After breaking $100,000, the Bitcoin market stands at a crucial crossroads.

In the short term, Federal Reserve policies and changes in institutional holdings will determine whether prices can reach new highs; in the long run, Bitcoin's ultimate positioning — whether it becomes "digital gold," evolves into a global settlement layer, or reverts to a speculative tool — will depend on the deep game of technology, policy, and market structure.

1. Short-term Outlook (2025-2026): Price Game Driven by Liquidity

Federal Reserve Policy's Key Turning Point

In May 2025, CME interest rate futures showed market expectations of two 25-basis-point rate cuts by the Fed in September and December. This expectation pushed Bitcoin past $100,000, but historical experience indicates:

• Expectation Fulfillment = Bullish Exhaustion: After the Fed began its rate cut cycle in 2019, Bitcoin fell by 40% within six months.

• Expectation Disappointment = Liquidity Crisis: If inflation rebounds and rate cuts are delayed, Bitcoin may quickly retreat to the $85,000 support level.

Standard Chartered's crypto research head Geoffrey Kendrick pointed out:

"Bitcoin usually experiences violent fluctuations in the first half of the rate cut cycle. The real trend upward often occurs in the middle to late stages of the rate cut — which requires observing whether the US core PCE remains consistently below 3%."

Dynamic Balance of Institutional Holdings

Current institutional Bitcoin holdings are "bipolar":

• Long-term Holders: MicroStrategy (440,000 BTC), US state government reserves (expected to reach 80,000 BTC by the end of 2025) lock up the circulating supply.

• Short-term Arbitrageurs: Bitcoin ETFs have a daily average trading volume of $470 million, with some institutions hedging risks through options.

This structure leads to:

• Upward Resistance: Whenever prices hit new highs, ETF investors tend to cash in (e.g., on May 10, 2025, Grayscale's GBTC saw a net outflow of $320 million in a single day).

• Downward Support: There are substantial institutional bids around $80,000 (BlackRock's IBIT average holding cost is $78,000).

Key Technical Levels

• Upside Target: $138,000 (the Fibonacci 2x extension of the 2021 bull market peak of $69,000).

• Risk Warning: The weekly RSI remains overbought (current value 78), cautioning against a potential 30% plunge similar to April 2021.

2. Medium-term Evolution (2026-2030): Declining Volatility and Value Reassessment

Fundamental Shift in Market Structure

If current trends continue, by 2030 the Bitcoin market may look like this:

| Feature | 2025 | 2030 (Projected) |

|---------|------|------------------|

| Institutional Holdings Ratio | 35% | 60%+ |

| Annualized Volatility | 85% | 45%-55% |

| Futures Open Interest | $59 billion | $200 billion |

| Government Reserves | 2 countries + 3 US states | 15+ countries |

This shift will bring:

• Volatility Premium Disappearance: The volatility ratio of Bitcoin to gold will drop from the current 4:1 to 2:1.

• Derivatives Dominating Pricing: Open interest in options markets may surpass spot trading volumes.

Three Paths of Technological Evolution

• Store of Value Route (Probability 45%): The Lightning Network stalls, and the main chain becomes a "settlement layer"; market cap surpasses gold (requiring a price of $250,000 per coin).

• Smart Contract Route (Probability 30%): BTCFi TVL breaks $500 billion; a Bitcoin-native stablecoin protocol emerges.

• Regulatory Strangulation Route (Probability 25%): Major global economies implement stringent regulations; liquidity dries up, causing long-term sideways price movement.

Reconstruction of Miner Ecosystem

After Bitcoin's fourth halving in 2025:

• Miner Revenue Structure Change: Transaction fees soar from 3% to 25% of revenue.

• New Miner Efficiency Breakthrough: Next-gen miners achieve 100 TH/s·J efficiency, phasing out 90% of old miners.

• Emergence of "National Mining Pools": Sovereign funds directly compete in hash rate.

3. Long-term Ultimate Question (Post-2030): Currency, Commodity, or New Species?

Experimentation with Monetary Attributes

The El Salvador case shows:

• Bitcoin's daily payment transactions as a fiat currency account for only 0.3% of national transactions, but the annualized return on the country's Bitcoin reserves reaches 27%, far exceeding gold.

The key contradiction lies in:

• Value storage requires price stability, while payment tools require frequent circulation; these two goals are fundamentally at odds.

Competition and Cooperation with Central Bank Digital Currencies (CBDCs)

Simulations by the Bank for International Settlements (BIS) show:

• When Bitcoin's market cap exceeds $10 trillion, it may trigger joint global central bank regulation, but Bitcoin and CBDCs may form a "tiered monetary system":

  • CBDCs for everyday payments

  • Bitcoin for large-scale cross-border settlements

Political Economy of Energy and Hash Power

By 2030:

• Bitcoin's network annual electricity consumption may reach 3% of global power generation.

• "Clean mining" becomes a geopolitical chip (e.g., Middle Eastern oil states using associated gas for mining).

• "Hash Power Wars" may emerge: Countries use mining pools to launch financial sanctions.

Conclusion: Seeking Certainty in Uncertainty

Bitcoin's future is full of dialectics:

• Short-term Certainty: It will test $130,000 by Q3 2025 but needs to navigate the seasonal "Sell in May" storm.

• Long-term Uncertainty: Its ultimate form still depends on yet-to-happen technological breakthroughs and regulatory games.

For investors, three principles can be grasped:

• Position Management: Hold at least 60% in spot, keep leverage in futures below 5x.

• Cycle Awareness: Understand the supply shock patterns brought by Bitcoin's halving every four years.

• Risk Hedging: Allocate 5%-10% of positions to Bitcoin mining stocks (e.g., MARA) to hedge price volatility.