As a seasoned investor and tech enthusiast with over two decades of experience under my belt, I have witnessed the rise and fall of countless innovations and market trends. However, none has captivated my attention quite like Bitcoin.
Bitcoin has soared beyond the significant $100,000 threshold, a significant landmark for cryptocurrency traders and confirmation for long-term investors and ardent supporters.
”He also recognizes that digital assets and other innovations are crucial to Making America Greater Than Ever Before.”
The rest of Trump’s administration is taking shape as one of the most crypto-friendly administrations yet, with Scott Bessent, founder of Key Square Capital Management, being nominated as the Secretary of Treasury and expressing enthusiasm about the President’s support for cryptocurrency. Bessent has stated that he is “eager about the President’s stance on crypto” and that “all possibilities are open when it comes to Bitcoin.
It’s important for crypto investors to comprehend what propelled Bitcoin to reach six digits in value, as well as speculate about its potential future trajectory.
Let me share a few reasons behind Bitcoin’s dramatic surge.
The four-year Bitcoin halving cycle
The cryptocurrency Bitcoin is designed to have a maximum of 21 million units, which are intended to be gradually released through the process of mining. By the year 2140, it’s projected that all these Bitcoins will enter the market. At present, more than 90% of this total supply has already been circulated.
This happens since the compensation for mining a Bitcoin block gets cut in half during an occurrence known as “halving.” The Bitcoin halving event takes place roughly every four years and plays a crucial role in Bitcoin’s overall economic system, as it determines the supply and distribution of the currency.
Initially when Bitcoin was introduced in 2009, miners were given 50 Bitcoins for each block they mined. A significant event called halving happened on April 19, 2024, where the reward for mining a block reduced to 3.125 BTC. This recurring reduction in block rewards, or supply growth, has been ongoing since Bitcoin’s inception. If the interest in Bitcoin stays constant or rises, the value of each Bitcoin will likely increase as a result of its enhanced scarcity.
Cryptocurrency investors frequently analyze market fluctuations to spot recurring patterns, drawing insights from previous price changes. However, overly relying on past trends can be potentially hazardous as history doesn’t repeat itself verbatim but tends to share similarities. Nonetheless, Bitcoin’s halving events have consistently demonstrated a significant and discernible effect on its value.
As a researcher, I’ve observed a recurring trend: Approximately one year prior to the halving event, there seems to be a brief but intense upward price movement, which I refer to as a ‘bull run’. Interestingly, the year that follows often brings about an even more substantial surge in price.
The question of whether Bitcoin halving directly impacts the price of Bitcoin, disregarding external factors, is often a topic of discussion. However, regardless of whether it’s due to the decrease in supply or a “herd effect” stemming from expectations based on past halvings, these events have undeniably fostered bullish attitudes.
It’s possible that the belief in a price increase after halving has caused it to happen, since traders often hold onto their Bitcoin more tightly during a halving, which reduces the supply and could lead to increased demand and potentially another market rally.
Institutions are getting into Bitcoin after ETF approvals
In simple terms, the surge in Bitcoin’s price in 2017 was primarily driven by individual investors. However, during the rally in 2021, large corporations like Tesla, MicroStrategy, SpaceX, Grayscale, and Square showed interest, but institutional investors generally showed caution before participating.
Corporate investors found the entry point into the cryptocurrency market too demanding due to its steep incline. These businesses are obliged to adhere to stringent laws and regulations through their dedicated compliance departments, and many of these institutions’ internal policies disallow investment in certain product categories.
On January 10, 2024, there was a significant change in the investment landscape for institutions when the United States Securities and Exchange Commission endorsed Bitcoin spot exchange-traded funds (ETFs). Unlike other countries such as Canada, which had given approval years prior, the U.S market holds the majority of the capital.
2024 saw a significant increase in institutional investment within the cryptocurrency market. Mainly, Bitcoin ETF issuers experienced increased benefits from this trend. Moreover, stocks associated with companies such as Coinbase and MicroStrategy achieved new highs in trading volume. Even initially struggling Spot Ether (ETH) ETFs are now demonstrating positive trends.
An increase in investment money suggests that institutions are becoming more accepting of the cryptocurrency market, paving the way for continued expansion.
The change of opinion regarding Bitcoin was particularly emphasized by Larry Fink, CEO of BlackRock, who previously expressed skepticism towards it but later converted into a supporter. Speaking to Jim Cramer on July 15, he declared, “It is a valid financial asset.
Currently, institutional investors possess a means that allows them entry into the crypto market while adhering to regulatory standards. For now, their options mainly consist of Bitcoin and Ether, but this might broaden in the near future.
Interest in XRP (XRP) and Solana (SOL) has been piqued by ETF issuers, with multiple applications currently being assessed. With Donald Trump’s significant election win indicating a possibility of relaxing crypto regulations in the US, the market for alternative coins could experience a growth spurt. This rise might even lead to the historic approval of an ETF for an altcoin.
The Bitcoin-Trump effect
For quite some time, the digital currency market has seen minimal movement, with Bitcoin’s price generally holding steady. However, this stability was shattered swiftly following Donald Trump’s presidential campaign victory and his subsequent election.
For the first time, cryptocurrency emerged as a significant issue in an American presidential campaign. Cryptocurrency experts viewed the election’s result as having a two-fold impact on Bitcoin’s value: it might surge with Donald Trump’s supportive stance or persist in its growth if Kamala Harris became Vice President.
With the Republican Party gaining control over Congress and the White House, President Trump now holds significant power to carry out his pro-cryptocurrency pledges. While it’s uncertain whether he will follow through on all of them, such as the idea of amassing a Bitcoin reserve, we are seeing positive indicators in the form of pro-crypto appointments to key administration roles.
Trump’s presidency might have sparked the ongoing bull market, fueling its growth, yet it’s not solely responsible for Bitcoin’s rise. Positive global economic trends have additionally contributed to its upward momentum.
Macroeconomic tailwinds carry Bitcoin
Amid periods of high inflation, weakened currencies, and changing global political landscapes, Bitcoin has become a captivating — though unorthodox — solution for addressing the globe’s economic issues on a large scale.
As a researcher, I find myself observing an intriguing shift in the Bitcoin landscape. What was once predominantly a domain for cryptocurrency aficionados and individual investors has now piqued the interest of institutional powerhouses and corporations seeking stability amidst an economically turbulent environment.
Due to high inflation rates, the buying power of fiat currencies globally has significantly reduced. In the U.S., inflation reached a staggering 9.1% in 2022 – the highest it’s been in four decades – but despite showing some improvement, it remains above usual levels, causing discomfort.
Increases in interest rates by the U.S. Federal Reserve, designed to control inflation, have caused market turbulence and sparked concerns about an impending economic downturn (recession).
In a shift towards more favorable strategies due to economic challenges, the Federal Reserve is easing its policies, as suggested by recent interest rate reductions. This increased liquidity might serve as an ideal environment for Bitcoin’s expansion.
In addition, fiat currencies have lost strength over time as central banks have continually injected liquidity into markets. This situation has sparked renewed interest in tangible assets. Until recently, gold was one of the few choices; however, Bitcoin, frequently referred to as “digital gold,” is now gaining attention due to its limited supply of 21 million coins.
Unlike conventional money, Bitcoin isn’t impacted by inflation – a feature that has become increasingly attractive to many people today.
Bitcoin to the moon in 2025
In my exploration of the cryptocurrency landscape, I’ve noticed an intriguing phenomenon – we seem to be in the ‘banana zone’, a period where the market consistently sets new record highs. Regarding Bitcoin specifically, as it ventures into uncharted territories of price discovery, predicting its ultimate peak price remains elusive and uncertain.
With Bitcoin’s price rapidly increasing, it’s no surprise that extravagant forecasts are popping up everywhere. However, there are some brave analysts who have gone as far as making precise predictions about BTC before the post-election surge – a move that could potentially lead to mockery if their predictions prove incorrect.
By October 22nd, market researcher Bernstein forecasted that the value of Bitcoin could soar to $200,000 before the year 2025 concludes. The report implies that the year 2025 signifies the start of a significant new phase for crypto markets, with Wall Street poised to surpass Satoshi as the largest Bitcoin wallet by the end of 2024.
According to Geoff Kendrick, the chief digital assets researcher at Standard Chartered – a bank that operates across borders – shares the opinion that Bitcoin may potentially reach $200,000 by the year 2025, regardless of who becomes the U.S. president in 2024.
As a researcher, I’ve observed that Standard Chartered has consistently projected a $200,000 price point since early 2024, even before Exchange-Traded Funds (ETFs) were given the green light. It appears that the bank’s forecast is being fueled by the expectation of a surge in institutional investment.
No matter what its final value turns out to be, there’s no denying that Bitcoin has achieved another significant accomplishment, further cementing its status as one of the globe’s most prized hard assets. It has already gone beyond silver in value, and now it aims to overtake gold.
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2024-12-05 08:18