What has driven the rise of Bitcoin this time?

With Bitcoin reaching a record high on Monday, evidence from institutional fund flows and derivatives suggests that this rise in Bitcoin may be more stable and lasting than previous speculative increases.
Due to an optimistic outlook on the upcoming discussions in the U.S. House of Representatives regarding digital asset regulation, Bitcoin has broken through $120,000 for the first time, expanding this year's rise to approximately 30%.
The strong capital inflow into Bitcoin exchange-traded funds (ETFs) and the increase in corporate capital allocation have jointly driven the rise of Bitcoin.
Analysts say that this Bitcoin pump is driven by institutional capital inflows, reflecting that Bitcoin is evolving into a more stable asset. As investors seek to diversify against market volatility and the impact of dollar fluctuations, Bitcoin is in high demand.
Institutional capital inflow is often long-term and not prone to rapid reversal, which makes the current rise more stable and enduring.
Bitcoin ETF had a strong start in July, attracting $3.4 billion in inflows so far. This includes a record $2.2 billion over the past two days, according to Farside Investors, marking the largest two-day net inflow on record.
At the same time, CoinDesk data shows that as of last Friday, the open interest in Bitcoin futures rose to a record 57.4 billion dollars.
The open interest tracks the total value of outstanding futures contracts, and a continuous rise often indicates increased institutional participation, as large investors tend to hold larger and longer-term positions and use futures for hedging.
However, the funding rate in the futures market remains sluggish. According to CoinDesk, the annualized funding rate is 10%, far below the peak of 80% in 2023 and 40% at the end of last year.
The funding rate reflects the cost that traders incur to maintain long leveraged positions in the futures market. A decrease in the funding rate indicates that they are less willing to pay to hold these positions, which is a sign of reduced speculative demand.
Glassnode's data shows that the leverage ratio of Bitcoin has decreased from 0.32 at the beginning of 2025 to 0.25.
The leverage ratio compares the futures bets of traders to the scale of Bitcoin on the exchange. A lower ratio means that more actual capital supports these bets, with less borrowed funds.
Glassnode's data also shows an increase in short covering, as traders who shorted Bitcoin repurchased Bitcoin with the rise in Bitcoin prices, adding momentum to the upward trend.