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The strong economy combined with the AI boom has led Bitcoin to surpass $61,000, reaching a nearly two-year high.
Recently, the U.S. economy has performed strongly, with manufacturing recovering for two consecutive months, raising concerns about rising inflation. At the same time, the development of artificial intelligence technology is accelerating, and the text-to-video model Sora released by OpenAI has sparked widespread discussion, while NVIDIA's earnings report greatly exceeded expectations, leading its market capitalization to briefly rank third in U.S. stocks. The crypto market has also experienced a strong pump, with Bitcoin's price breaking through $61,000, and the positive impact of the Spot ETF on the market is beginning to show results.
In early February, data released by the U.S. Department of Labor showed that non-farm payrolls increased by 353,000 in January, marking the largest increase in nearly a year. This data raised market concerns about rising inflation. The subsequently released January CPI data also exceeded expectations, with a year-on-year increase of 3.1% and a month-on-month increase of 0.3%. Core CPI rose by 3.9% year-on-year and 0.4% month-on-month. These figures caused market fluctuations, with the Nasdaq falling by 1.8% on the same day, and the yield on the 10-year U.S. Treasury bond rising sharply.
Since the end of January, U.S. Treasury yields have shown a slow upward trend, reflecting the market's expectations for potential inflation. Currently, the market widely expects that the Federal Reserve may make its first interest rate cut in June, and Goldman Sachs has also adjusted its expectations, believing that the U.S. will only cut rates four times this year, rather than the previously expected five times.
The performance of the US economy is closely related to the manufacturing cycle. The latest released Markit Manufacturing PMI preliminary value is 51.5, which is higher than expected, marking the US manufacturing sector staying above the boom-bust line for two consecutive months. The number of manufacturing orders has reached a nearly two-year high, indicating that the US may be entering a new round of inventory cycle, driving employment and inflation up.
Nevertheless, the market generally believes that the possibility of the Federal Reserve continuing to raise interest rates is low. According to FedWatch data, while the probability of rate cuts has decreased, the probability of rate hikes has remained at a low level. The current economic development is accompanied by a certain degree of inflation, but it has not hindered the rise of stocks and crypto assets, reflecting the market's optimistic attitude towards future rate cuts.
In the field of technology, the video generation tool Sora released by OpenAI has garnered widespread attention. The high-quality videos produced by this tool showcase remarkable technological advancements, indicating that the content creation and media industries may face significant transformations. The speed of AI technology development has far exceeded expectations, and the short span of just over a year from ChatGPT to Sora is enough to prove this.
NVIDIA's latest financial report further confirms the booming development of the AI industry. The company's revenue in the fourth quarter grew by 265% year-on-year, and net profit surged by 769%, with multiple data points exceeding market expectations. After the report was released, NVIDIA's stock price rose more than 16%, briefly making its market capitalization the third largest in the U.S. stock market. This performance drove the three major U.S. stock indexes to open higher, with the Dow Jones and S&P 500 continuing to set new historical highs.
It is worth noting that a preference for tech stocks is forming among the new generation of young investors. Data shows that the number of custodial accounts for American teenagers has significantly increased, with the most popular being tech stocks represented by the "Big Seven." This trend suggests that, supported by AI technology, tech giants and crypto assets, among other "new assets," may become mainstream investment varieties in the long term.
During the Spring Festival, the price of Bitcoin significantly rose, starting from around $43,000 and breaking through $61,000 at its peak. This wave of increase is mainly attributed to the reduced selling pressure from Grayscale and the continuous inflow of funds into Bitcoin Spot ETFs. As of February 26, 11 ETFs have accumulated a net inflow of $6.15 billion, with the market capitalization of the held coins accounting for 3.81% of Bitcoin's total market capitalization, surpassing the number of Bitcoins held by a well-known exchange's wallet address.
Apart from ETF, institutions like MicroStrategy continue to increase their holdings in Bitcoin. From February 15 to 25, MicroStrategy purchased another 3,000 Bitcoins, bringing its total holdings to 193,000 coins, with an average holding cost of about $31,544.
One of the current focal points in the market is the approval progress of the Ethereum Spot ETF. Several institutions have submitted relevant applications, with the most important date being May 23, the date on which the U.S. Securities and Exchange Commission will make its final decision on a certain institution's Ethereum ETF. If the Ethereum ETF is approved, it will bring new funding sources and development opportunities to the crypto market.
Despite Bitcoin's market capitalization exceeding one trillion dollars, there is still significant room for growth. Some analysts believe that Bitcoin is competing with asset classes such as gold, real estate, and even the S&P index, with its potential market size far exceeding current levels.
The discussion about the functionality expansion of the Bitcoin network has also received a lot of attention. The recently released Bitcoin L2 standard aims to ensure that the core value attributes of Bitcoin are maintained while expanding its functionalities, which helps alleviate investors' concerns that Bitcoin's "digital gold" properties may be weakened.
Overall, despite a rebound in inflation, the market continues to maintain a rising momentum driven by the strong push of the AI revolution. Currently, the market is more focused on the timing of the first interest rate cut rather than the possibility of continued rate hikes. The successful launch of the Bitcoin ETF has injected confidence into the market, the impact of Grayscale's selling pressure is weakening, and the market is looking forward to whether Bitcoin can break through the historical high of $69,000.