Bitcoin just smashed through the US$125,000 barrier like it was made of pale pink tissue paper. Another mind-bending all-time high (ATH) has got the crypto kids and trad finance nerds equally stunned. But what exactly is sending Bitcoin into the clouds this time?

The Retail Army is Back

Retail buyers (that’s individual buyers like you and me, not the corporate big guns) are flooding back into crypto. It feels like Black Friday at the Bitcoin shop.

We’re seeing this firsthand at CoinJar, where new accounts are firing up en masse, and dormant wallets that have been having a decent napski are waking up and looking for coffee.

The retail investors are now moving in after large corporations have added strangely huge amounts of Bitcoin to their treasuries. 

Data from the Apple App Store rankings indicates that the current market has not yet reached the peak levels observed in previous bull markets, suggesting potential for further retail participation. The increasing number of downloads for cryptocurrency applications correlates strongly with the entry of new buyers into the market, further fueling this upward trend.

Retail investors often react to price surges and corporate endorsements as validation of an asset’s value. This herd behavior can accelerate price increases. But, herds can run in both directions. 

Large retail investor patterns can also induce volatility, because retail investors may sell quickly on price dips. The herd effect can be beautiful and terrifying in equal measure.

But for now, what we do know is that when retail investors start buying, especially after heavy corporate buying, it can be a powerful market dynamic that often amplifies price movements in assets like Bitcoin. 

As we all know, though, crypto prices can fall through the floor into the depths of Satan’s lair just as fast as they can rocket to outer space. So keep that in mind in case you over-invest and become so povo that 2-minute noodles seem like a gourmet meal.

Other factors pushing the price up

What happens in the US heavily influences crypto sentiment. So it may be interesting to investors that The US Congress has passed new legislation to advance cryptocurrency’s role in mainstream finance, potentially fuelling price surges. 

The Genius Act establishes the first regulatory framework for stablecoins. Stablecoins are digital currencies tied to assets like the U.S. dollar to maintain stable value. These coins currently operate in a regulatory grey area. In practice, this means that major corporations like Walmart or Amazon could launch their own stablecoins. 

The Clarity Act is making its way to the senate but has not yet been signed into law. It makes clear rules for crypto organisations, potentially reducing legal risks for companies that are worried about breaking rules that don’t exist yet. This gives innovators more confidence to build cool things.

CBDC Ban Bill: This bill, if signed into law, would permanently prohibit a U.S. CBDC, a digital currency issued and backed by the Federal Reserve. Supporters of this bill say that it protects financial privacy and limits federal overreach. 

All of the above is steering the cryptocurrency industry into a space where it is seen as having mainstream acceptance by many investors. Larger institutions may feel more confidence moving within the crypto industry. And Bitcoin being the most popular cryptocurrency may benefit from these changes to the regulatory landscape.

The Million-Dollar Question: Where to Next?

So, will Bitcoin keep climbing beyond US$125,000? Will it hit US$200,000? US$500,000? A million?

Unfortunately, no one knows the future, and that everything about crypto is uncertain except one thing: It’s volatility. 

What we do know is that the retail army is back, corporate adoption is accelerating. Regulators in the USA might finally be getting their shiitake mushrooms together. 

To many investors, these may well be bullish signals. 

But we also all know that bubbles can pop and spray wetness across everyone.

This Bitcoin jet to US$125,000 is definitely a “hot damn” moment, but pack a parachute, just in case of an undignified fall full of cuss words from a glorious height.