What Makes Bitcoin's Price Go Up?

By: WEEX|2025-09-22 10:30:05
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Key Takeaways:

  • Bitcoin has a well-documented history of high volatility.
  • Numerous factors can drive its price upward, including shifts in social media sentiment, enhancements to the Bitcoin network, and the introduction of new Bitcoin-centric financial products.
  • Understanding how specific market events influence demand for Bitcoin can offer traders deeper insight into the reasons behind its constant price fluctuations.

Factors Influencing Bitcoin’s Price

Bitcoin’s price is largely determined by how the market values its functionality.

In economics, price stems from the relationship between supply and demand. As the available quantity of an asset (supply) changes, and the number of people interested in buying it (demand) shifts, the price adjusts accordingly.

It’s important to note, however, that Bitcoin has a fixed maximum supply of 21 million coins. This scarcity is a fundamental feature designed into the protocol and will never change.

Since Bitcoin’s supply is fixed and transparent, most price movements are driven by changes in demand, which reflect how people perceive Bitcoin’s usefulness and potential.

When demand for Bitcoin’s functionality increases, its price tends to rise. Conversely, when demand decreases, the price often falls.

To better understand the dynamics behind Bitcoin’s price movements, it can be helpful to examine the factors that drive increased demand.

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What Factors Can Positively Impact Bitcoin’s Price?

Bitcoin is widely recognized as a highly volatile asset. It is not uncommon for BTC to experience daily price swings of 10% or more.

As the saying goes, “History never repeats itself, but it often rhymes.” This applies to Bitcoin as well. While past performance doesn’t guarantee future results, many analysts study previous events that preceded Bitcoin price increases to understand how the market might react if similar conditions arise again.

Below are several factors that have historically contributed to rising Bitcoin prices.

Institutional Adoption and Activity

Increased institutional adoption and the approval of regulated financial products have often acted as bullish catalysts for Bitcoin’s price.

For example, the approval of Bitcoin ETFs has historically opened access to new groups of investors. On February 19, 2021, the Evolve Bitcoin ETF launched on the Toronto Stock Exchange (TSX). Within 24 hours of its debut, Bitcoin’s price increased by 9%. Similarly, the launch of the ProShares Bitcoin Strategy ETF (BITO) in October 2021 contributed to an 8% price rally over two days.

Moreover, several publicly traded companies have triggered bullish market reactions after announcing significant Bitcoin purchases. In 2020, MicroStrategy became one of the first major corporations to allocate treasury assets to Bitcoin. Later, companies like Block (formerly Square) and Tesla also disclosed large Bitcoin investments, fueling price rallies of 19% or more.

When influential firms increase their demand for Bitcoin, they contribute to upward price pressure by absorbing portions of the finite supply.

Social Media Sentiment

Platforms like X (formerly Twitter) and YouTube have become influential in spreading crypto-related news and shaping market trends.

In late 2020, a “laser eyes” movement spread across social media, with users modifying their profiles to show support for Bitcoin reaching $100,000. During this period, Bitcoin’s price rose from around $10,000 to over $60,000.

Posts from high-profile individuals have also driven market sentiment. For instance, when Elon Musk added “#bitcoin” to his X bio in January 2021, Bitcoin’s price increased by 20% shortly afterward.

Positive sentiment on social media can enhance public perception of Bitcoin, leading to increased demand and higher prices.

Macroeconomic and Geopolitical Factors

Many investors regard Bitcoin as “digital gold”—a store of value that retains worth over time due to its scarcity and decentralized nature. Unlike government-issued currencies, Bitcoin cannot be inflated at will.

This feature has driven demand in countries experiencing high inflation and currency devaluation, such as Nigeria, Turkey, Argentina, and Venezuela. Citizens in these nations sometimes turn to Bitcoin to preserve their wealth.

Furthermore, countries like El Salvador and the Central African Republic have adopted Bitcoin as legal tender, aiming to increase financial inclusion and reduce dependence on foreign currencies.

As more people and governments recognize Bitcoin’s value proposition, increased demand can contribute to price appreciation.

Regulations and Legal Changes

While regulatory changes are often viewed with caution, clear and supportive regulations have sometimes positively impacted Bitcoin’s price.

A 2020 report from the Federal Reserve Bank of Dallas indicated that favorable regulatory events were correlated with short-term Bitcoin price increases.

For example, in 2023, Hong Kong updated its crypto regulations to allow licensed platforms to serve retail traders. Following this announcement, Bitcoin’s price rose by 2%, reflecting improved market access and investor confidence.

Well-designed regulations can provide clarity and legitimacy, attracting more participants to the market and thereby boosting demand.

Trading Volume and Market Dynamics

In futures markets, sharp price movements can trigger cascading liquidations. When prices rise rapidly, traders who shorted Bitcoin may be forced to buy back BTC to cover their positions—a situation known as a “short squeeze.”

This buying activity can further drive up demand and prices. Throughout 2023, notable short liquidation events often coincided with Bitcoin price rallies, including:

  • October 15: $136.58M short liquidations, BTC up 5%
  • October 22: $275.45M short liquidations, BTC up 10%
  • November 8: $272.52M short liquidations, BTC up 3%
  • December 3: $203.45M short liquidations, BTC up 5%
  • December 4: $158.07M short liquidations, BTC up 5%

Such market mechanisms illustrate how trading activity can influence short-term price movements.

Technical Patterns

Technical analysis is commonly used to identify potential market trends. Certain chart patterns, such as the “golden cross,” are considered bullish signals.

Since 2013, ten golden crosses have appeared on Bitcoin’s daily chart. Seven of these were followed by bull markets, leading some traders to view this pattern as a positive indicator.

While technical patterns can influence trader psychology and market behavior, they should not be used in isolation for making trading decisions.

Bitcoin Network Improvements

Major upgrades to the Bitcoin network are rare but can have significant positive effects on price when implemented.

The Taproot upgrade, activated in 2021 after years of development, improved Bitcoin’s privacy and efficiency. Leading up to its implementation, Bitcoin’s price increased by over 130%, rising from $29,000 to $69,000.

Enhancements that strengthen the network’s functionality tend to boost confidence and demand, supporting higher valuations.

Buy Your First Bitcoin Now

Although Bitcoin remains a volatile asset, understanding the factors that influence its price can help you navigate the digital economy with greater confidence.

Whether you are new to trading or looking to expand your knowledge, platforms like WEEX offer accessible entry points for purchasing Bitcoin and other digital assets. You can begin investing with a relatively small amount and gradually explore the growing cryptocurrency market.

Register on WEEX now and buy your first bitcoin.

Further Reading

Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.

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TL;DR

Do you pay tax on crypto without selling? Yes, in most cases, you owe crypto tax even if you don’t cash out.Do you pay tax on crypto trading? Yes. Buying, selling, or swapping crypto (ETH to BTC) can trigger capital gains tax.How is crypto trading taxed? Profits are usually taxed as capital gains, but frequent trading or futures trading may be treated as business income.Is staking taxable? Yes. Crypto staking rewards are taxed as income when received, and taxed again as capital gains when sold.Are crypto airdrops taxable? Yes. Airdrops are taxable income at the time you receive them, even if you don’t sell.When do you owe crypto taxes? When you trade, earn, or receive crypto — not just when you withdraw to fiat.What are common crypto tax mistakes? Not tracking trades, ignoring staking rewards, and assuming no tax without withdrawal.How to report crypto taxes easily? Export your data from WEEX and use crypto tax software like KoinX to generate reports.

Most crypto users assume one thing: If you haven't withdrawn your funds, you don't owe any tax.

It sounds logical , but in most cases, it's wrong.

As crypto markets evolve, tax rules have become clearer and stricter. What matters is not whether you cash out, but how you interact with your assets. Trading, earning, or even receiving tokens can all trigger taxable events, often without you realizing it.

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Do You Pay Tax on Crypto Trading? Even Without Cashing Out

The most common misconception is that taxes only apply when you convert crypto into fiat.

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If you trade ETH for BTC, you may still need to calculate your gain — even though no money ever leaves the crypto ecosystem.

What matters is whether you realized a profit.

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And that’s only the first layer.

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This dual structure — income first, gains later — is one of the most commonly misunderstood aspects of crypto taxation, and a frequent source of reporting errors.

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In many cases, airdropped tokens are treated as income once you have control over them and they have a measurable market value.

That means the moment you can claim or access the tokens, their value may already be taxable — regardless of whether you sell them.

If you later sell at a higher price, the difference is taxed again as a gain.

Like staking, airdrops often create two separate tax events:

one when you receive the tokens, and another when you dispose of them.

Crypto Tax Mistakes That Can Cost You Money

The rules themselves are not always complicated — but applying them correctly can be.

Many users assume that staying within crypto avoids tax, overlook income from staking or airdrops, or fail to track the original cost of their assets across multiple trades.

As activity increases, especially across different assets and strategies, keeping accurate records becomes significantly harder. Without proper tracking, it’s easy to either underreport — or overpay.

When Do You Actually Owe Crypto Taxes? Key Takeaways

Crypto taxation is not just about how much you earn. It’s about when and how those earnings are realized.

Trading, staking, and airdrops are taxed in different ways, often at different points in time. And in many cases, tax obligations arise long before any funds are withdrawn.

The key takeaway is simple:

If you are actively participating in the crypto market, you are very likely generating taxable events — whether you notice them or not.

Understanding this early makes it easier to stay compliant, avoid costly mistakes, and make better decisions as your trading activity grows.

How to Report Crypto Taxes on WEEX: A Simple Step-by-Step Guide

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As your activity grows, especially across trading, staking, and rewards, keeping track of every transaction manually can quickly become overwhelming. Using a platform where your trading history is organized and easily exportable can make a meaningful difference when it comes to filing.

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About WEEX

Founded in 2018, WEEX has developed into a global crypto exchange with over 6.2 million users across more than 150 countries. The platform emphasizes security, liquidity, and usability, providing over 1,200 spot trading pairs and offering up to 400x leverage in crypto futures trading. In addition to the traditional spot and derivatives markets, WEEX is expanding rapidly in the AI era — delivering real-time AI news, empowering users with AI trading tools, and exploring innovative trade-to-earn models that make intelligent trading more accessible to everyone. Its 1,000 BTC Protection Fund further strengthens asset safety and transparency, while features such as copy trading and advanced trading tools allow users to follow professional traders and experience a more efficient, intelligent trading journey.

Follow WEEX on social media:

· Instagram: @WEEX Exchange 
· X: @WEEX_Official 
· Tiktok: @weex_global 
· Youtube: @WEEX_Global 
· Discord: WEEX Community 
· Telegram: WeexGlobal Group

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