At the beginning of the new year in 2021, bitcoin ushered in a round of astonishing rise, attracting the attention of global capital markets. Since new year’s day, the price of bitcoin has reached a high of US $34000 and US $40000, pushing the total market value of cryptocurrency market to exceed US $1 trillion. Overseas investment institutions also have strong views on the special currency. Some believe that the weak US dollar, the increased risk of inflation and the entry of institutions have pushed up the prices. However, there are also points of view to remind that this round of rapid rise has accumulated bubbles and huge speculative risks. Bitcoin’s performance in 2020 has experienced five rounds of rapid rise, especially since the bottoming of $3850 low on March 12 last year. Bitcoin’s performance in 2020 can be described as soaring all the way. According to the “coin table” website, the return on investment in bitcoin in 2020 will be several times that of the S & P 500 index and gold. As early as the first week of 2020, investors speculated that increased geopolitical turmoil might stimulate demand for cryptocurrency, and expectations that bitcoin might become a safe haven asset similar to gold gradually strengthened, and bitcoin prices jumped to $7300. Since October 2020, compared with the flat performance of other assets, especially the continued weakening of the US dollar, bitcoin’s “digital gold” narrative has been increasingly strengthened among institutional investors, supporting it to set new records successively. This confirms JPMorgan CEO Jamie Dimon’s 2017 forecast that “bitcoin prices will continue to rise even if it is moderately squeezed out over a long period of time as an alternative to gold.”. Today, JP Morgan, Morgan Stanley, Tudor investment, Blackstone and other traditional financial “tycoons” have begun to pile into the board. PayPal, a multinational payment company, announced that it would allow its 346 million customers to hold bitcoin and other cryptocurrencies and use digital assets to shop with 26 million merchants on its network. A report by quantum economics, a foreign exchange and cryptocurrency analysis company, at the end of October 2020, suggested that PayPal’s move “is likely to be a watershed in the moment when bitcoin enters the mainstream.”. Under the soaring risks, some overseas investment institutions believe that this round of rise is not only strongly driven by the actual demand, but also has the clear logic of historical evolution. On the one hand, the global outbreak of new crown pneumonia has increased the demand for risk aversion of investors. In 2020, the global economy suffered the largest decline since World War II due to the impact of the epidemic, and the international financial risks piled up to a record high. Tracing back to the origin of bitcoin, we can find that it has a natural relationship with anti inflation. Bitcoin is a virtual encrypted digital currency proposed by Nakamoto Nakamoto, who is said to be Japanese American, on November 1, 2008 and was born on January 3, 2009. It initially set the rule that only 21 million pieces can be generated through “mining” on the Internet. This decentralized digital currency is designed to combat inflation caused by the government’s over issuance of fiat money. The upper supply limit and the law of halving the circulation every four years make it have a certain anti inflation ability, which is in contrast to the central banks of other countries that want to issue more money and stimulate recovery under the conditions of zero interest rate or even negative interest rate. Under the impact of the epidemic, in order to hedge against inflation risk, banks, insurance companies and financial institutions began to embrace the cryptocurrency market including bitcoin. The market value of bitcoin has been able to reach its current level rapidly, mainly because institutional funds have replaced the global retail investors. “The current macroeconomic environment sets the perfect environment for this asset, which combines the advantages of technology and gold, after confirming the purchase of bitcoin worth more than $745 million. Negative interest rates, extreme monetary policy, inflated public debt and dissatisfaction with the government have all provided a powerful boost to bitcoin investment. Jeff Doman, chief investment officer of ALCA fund, which focuses on encryption assets, believes that “in a long period of time, the depreciation of any other currency will strengthen the purchasing power of bitcoin”. In addition, the US dollar credit is widely questioned, which strengthens the willingness of diversified asset distribution. Before the outbreak of new pneumonia, the U.S. government and U.S. funded companies issued a huge amount of debt to share its costs with the world, relying on the US dollar’s global reserve currency status and the Federal Reserve’s long-term ultra-low interest rate policy. As of September 30, 2020, the U.S. government’s budget deficit soared to a record $3.1 trillion. Many observers have warned that such debt is unsustainable – once the crisis comes, such as “printing money” such as quantitative easing will appear again, and the monetary credit of the US dollar is bound to decline or even be overdrawn. However, the largest “money printing operation” in the history of the Federal Reserve in 2020 has not stopped. At present, the monthly purchase of treasury bonds and government-backed mortgage bonds is still as high as $120 billion. This has exacerbated global investors’ concerns about the US dollar’s credit, with the dollar and its assets falling to their lowest levels in recent years. However, the risks of bitcoin cannot be ignored. Some cryptocurrency research institutions have warned that the current active bitcoin accounts are close to the record high at the end of 2017, which may be a signal for some investors to sell. In the history, bitcoin has experienced many big ups and downs. For example, in December 2017, the price of bitcoin hit a record high of $20089, but after a month, it fell by more than 50%. Analysts warn investors should be wary of speculative risks in the bitcoin market. On the one hand, the bitcoin market is still small and easy to manipulate; on the other hand, there is no sound bitcoin market supervision mechanism in the world. It can be predicted that in 2021, the bitcoin market will still be haunted by the labels of automatic market maker, large volatility, ultra-high yield, anti French currency and central banking system. It should be the common responsibility of global financial regulators and market participants to prevent the excessive speculation of bitcoin and further increase the systemic risk.