Bitcoin price may break through $1 million: Zhao Changpeng (CZ) explains the driving force behind ETFs and government purchases

Changpeng Zhao (CZ), co-founder of Binance, recently said in an interview with Rug Radio that he expects the price of Bitcoin (BTC) to reach $500,000 to $1 million in the current market cycle. This prediction has attracted widespread attention in the cryptocurrency community, and his analysis of market development trends has also provided investors with a new perspective.

ETFs promote Bitcoin institutionalization

CZ pointed out that the Bitcoin market is undergoing an institutional transformation, and the launch of spot exchange-traded funds (ETFs) is a key driver of this change. He emphasized that with the emergence of ETFs, Bitcoin is not only limited to the vision of retail investors, but has gradually become an investment target for traditional financial institutions. CZ believes that this institutionalization trend is extremely beneficial to the rise in Bitcoin prices because it attracts a large amount of institutional funds, and "most of the funds in the United States are institutional funds."

ETFs, especially Bitcoin ETFs, are becoming an important force driving the rise in Bitcoin prices. CZ believes that the influx of institutional funds has not only enhanced the liquidity of the market, but also made Bitcoin more widely recognized worldwide. This trend is in sharp contrast to the performance of other altcoins. Although the gains of other cryptocurrencies are relatively small, the rise of Bitcoin still makes the market sentiment optimistic.

New institutional funds drive Bitcoin growth

According to the analysis of Alex Obchakevich, founder of Obchakevich Research, 70% of Bitcoin's appreciation comes from the injection of new institutional funds, and the remaining increase comes from the redistribution of crypto assets. This view further verifies the important role of ETFs in this bull market. Although the market may experience a small volatility adjustment, the long-term upward trend of Bitcoin has emerged. Obchakevich pointed out that ETFs, especially Bitcoin ETFs, have become an important driving force for the current bull market.

Government participation helps prices rise

In addition to the influx of institutional funds, CZ also mentioned that more and more governments have begun to include Bitcoin in their strategic reserves, which has also had a positive impact on Bitcoin's price trend. He believes that the government's purchase behavior is not only a recognition of Bitcoin, but also an affirmation of its value. Globally, some countries have begun to purchase Bitcoin on a large scale to ensure its position in the future financial system.

For example, El Salvador has insisted on increasing its holdings of Bitcoin since becoming the first country in the world to use Bitcoin as legal tender despite opposition from the International Monetary Fund (IMF). Data shows that El Salvador purchased 7 bitcoins worth more than $650,000 in April 2023, bringing the country's total bitcoin reserves to nearly 6,170, worth about $580 million. In addition, the Kingdom of Bhutan is also actively accumulating bitcoins and plans to establish a strategic cryptocurrency reserve.

US policy shift and global impact

CZ also pointed out that since President Trump's election, the US policy in the field of cryptocurrency has undergone a significant shift. After gradually adopting pro-crypto policies, the US government has recognized the potential of Bitcoin as a reserve asset and taken positive measures to encourage its development. He believes that this policy shift will not only benefit the US economy, but will also drive other countries to follow suit.

He further emphasized that for retail investors, the investment opportunity of Bitcoin has existed for 15 years. If you start investing now, you may have missed the best time, but the decision to invest is also a personal choice.

Overall, CZ's views and market observations reveal the possible sharp rise in Bitcoin prices in the future. The continuous inflow of institutional funds, especially the launch of Bitcoin ETFs, is driving the market towards institutionalization, and the government's participation has also provided strong support for the steady rise in Bitcoin prices. As many countries around the world increase their investment in Bitcoin, the future market prospects are undoubtedly worthy of investors' attention. Although market volatility still exists, Bitcoin's prospects are still full of potential, driven by institutionalization, government support and changes in the global financial environment.