Since it is a financial asset, the rise and fall of bitcoin price is a normal phenomenon. In the past, the rise and fall of bitcoin price in a single day exceeded 10%. However, since the beginning of this year, the phenomenon of rapid price rise and violent shock is unprecedented. This reflects the changes in the bitcoin trading market: the rising price indicates that bitcoin's status and recognition as a financial asset are on the rise; the price fluctuation reflects the divergence between market participants and the price of bitcoin and the liquidity of bitcoin. The reasons can be seen from the following three aspects.

First, under the background of global excess liquidity, the demand for financial asset investment is rising. After the global financial crisis, the quantitative easing policy adopted by the United States has increased the liquidity of US dollars in the international market; the long-term monetary easing policy of major economies and the resulting low interest rates have prompted a large number of funds to flow into the stock market. From February 2009 to February 2021, the Dow Jones index rose nearly 3.5 times, the S & P 500 index rose more than 4 times, and the NASDAQ index rose more than 9 times. In the US stock market bubble continues to expand, especially in the recent market on the peak of the bubble will become more and more worried, the bitcoin as the representative of the encryption assets become a popular alternative.

Second, the recognition of mainstream investment institutions to the investment value of the special currency has increased. In recent months, more and more mainstream investment institutions have expressed their strong interest in bitcoin: BlackRock, the world's largest asset management company, has taken bitcoin futures as a potential investment of its two funds, and Wall Street giants such as JPMorgan Chase and Goldman Sachs have also indicated that they are starting to lay out their plans; some listed technology companies have also made no secret of their praise for bitcoin and invested a lot of money to buy bitcoin, such as Tesla. The demonstration effect of these institutional investments has contributed to the price of the special currency. After Tesla announced on February 8 that it would invest $1.5 billion in bitcoin, the price of bitcoin soared by more than 10%.

Third, the existence of bitcoin whale brings more uncertainty to market transactions. In the process of development, bitcoin has formed a group of individuals and groups with large amount of bitcoin, which can affect the market price trend, and is called bitcoin whale. In the early days, giant whales were mainly contributors or believers of bitcoin. In recent years, listed companies and financial investment institutions have also joined in. According to the data of santiment, an encryption asset analysis platform, there were 111 wallets with more than 10000 bitcoins in November 2020. These giant whales have the ability to control the price of bitcoin and affect the liquidity of bitcoin market, thus aggravating the fluctuation of bitcoin price. In addition, the differences between the giant whales and bitcoin prices have also become an important factor in the sharp fluctuations of bitcoin prices. According to the latest report of glassnode, a data aggregator in the encryption market, some giant whales have made profits and "fled" since February, reducing their holdings of about 140000 bitcoins. At the same time, some giant whales are quietly adding bitcoins.

(2021-4-5)