Bitcoin reaching $100,000 is a significant milestone for the cryptocurrency world, marking a shift from its origins in cypherpunk ideology to widespread financial acceptance. This achievement represents a historic moment for the industry.
Bitcoin, previously considered a niche investment for a small group of people interested in cryptography and technology, has steadily increased in value over the years. It started at $1 in 2011, reached $1,000 in 2013, and has now surpassed the highly sought-after six-figure mark in 2024.
The recent increase in the value of Bitcoin shows how it has progressed from being a mere experiment to becoming a recognized financial asset on a global scale.
However, reaching $100,000 was not an easy journey for the cryptocurrency. Despite being declared "dead" multiple times, it managed to defy expectations and rise again each time.
According to Mikko Ohtamaa, who is a co-founder of the algorithmic trading company Trading Strategy, we have a limited window of opportunity of two to three years to demonstrate that cryptocurrency has the potential to make a positive impact on the world. He believes that this is the last opportunity to do so, but also mentions that there is currently favorable market conditions working in our favor.
The past decade has mainly been driven by speculation, but now it is important to transition towards practical real-world applications. This recent surge in market activity is notable for several distinct reasons.
Bitcoin is no longer seen as just a risky investment, but rather as a safe option for protecting against inflation. It is now considered a legitimate asset class with increasing support from institutional investors.
Attribution: Cynthia Lummis
Exchange-traded funds (ETFs) that focus on specific areas, such as spot-based ones, have become increasingly popular in countries like the United States and Hong Kong. The election of Donald Trump, who is supportive of cryptocurrencies, as president of the US has created a welcoming environment for the cryptocurrency industry.
Related: A report predicts that the adoption of cryptocurrency is expected to reach 8% by the year
During his campaign, Trump vowed to appoint a new Securities and Exchange Commission Chair to replace Gary Gensler, who is viewed negatively in the cryptocurrency community for his tough regulatory stance.
Investors are optimistic that this change could lead to fewer obstacles from regulations, creating a more welcoming atmosphere for cryptocurrency assets. Gensler's time in office, known for a strategy of enforcing regulations rather than providing clear guidelines, has faced criticism from the industry.
The road to reaching $100,000 for Bitcoin had a rough beginning with a single major price drop. Bitcoin's journey to this significant milestone has been far from straightforward, characterized by unpredictable price fluctuations, market downturns, and moments of uncertainty about its future.
One significant moment of struggle for Bitcoin occurred when its value dropped from $1,000 in 2013 to $200 in 2014. The downfall of Mt. Gox, which was the biggest Bitcoin exchange at that time, had a major impact during this time. Even now, ten years later, the payouts to its creditors are still being discussed.
During December 2017, the value of Bitcoin surged to almost $20,000, driven by the popularity of initial coin offerings (ICOs). But, this was short-lived as governments like the US started cracking down on ICOs, considering them as unauthorized securities offerings. China went a step further and completely prohibited ICOs. As a result, by December 2018, the price of Bitcoin had dropped to $3,200.
A recent study found that 80% of Initial Coin Offerings (ICOs) carried out in 2017 were
In 2021, Bitcoin saw a significant increase in value, reaching $63,000 due to the involvement of institutions and well-known companies like Tesla, led by Elon Musk, which contributed to the upward trend.
Origin: Arkham Intelligence
However, excitement was reduced due to regulatory pressure as China implemented restrictions on Bitcoin mining, causing the price to sharply decrease to $29,000. After reaching a new peak of $69,000 in November 2022, Bitcoin fell to a low of $15,000 amidst widespread turmoil in the cryptocurrency industry following FTX's failure, Three Arrows Capital's collapse, and the crisis involving the Terra-Luna stablecoin.
In the year 2024, Bitcoin has seen a significant increase in value. The approval of spot Bitcoin ETFs by the SEC in January allowed more people to join in, and Trump's election in November has further boosted the rally.
According to market analyst Justin d'Anethan based in Hong Kong, Bitcoin is currently being driven by factors such as easier access through ETFs, increased interest from corporations, and growing investments from institutions worldwide. Additionally, the move away from the US dollar in BRICS economies is also contributing to Bitcoin's appeal as a potential hedge in a changing global economic landscape.
Why is $100,000 significant for Bitcoin?
To supporters of Bitcoin, $100,000 holds more value than just being a number. It represents a psychological milestone that confirms their unwavering belief in the cryptocurrency after years of passionate support, as seen through the popular trend of using laser-eyed profile pictures on social media.
However, according to d'Anethan, reaching $100,000 is not the ultimate objective.
"In the last year, the increase in Bitcoin's value has been mostly influenced by experienced investors. We have observed companies like MicroStrategy, exchange-traded funds (ETFs), and pension funds beginning to invest in Bitcoin, although this has not been widely publicized," he explained.
Individual investors have not yet started investing heavily, but once they do, the excitement will likely drive the price of Bitcoin even higher than $100,000. Trump's team also mentioned the concept of a strategic Bitcoin reserve, causing differing opinions among people.
Author: Ed Krassenstein/Impure Hoonter
There are differing opinions on whether this is a step towards centralization or not. Quary, the founder of Bitcoin marketplace Magisat, believes it does not affect Bitcoin's decentralized principles.
According to Quary, the individual who owns Bitcoin does not have any impact on the network.
It is hoped that both the United States and the BRICS countries (Brazil, Russia, India, and China) share an interest in Bitcoin and hold significant investments in it. This ideal scenario would involve a decentralized network where all parties can participate without bias.
The future of Bitcoin remains uncertain, with reaching $100,000 seen as a significant milestone but also just the start of a larger narrative for the cryptocurrency.
In the near future, as the US Federal Reserve is expected to continue lowering interest rates, Bitcoin may benefit from a positive overall environment for high-risk investments.
According to d'Anethan, unless there is a significant liquidation due to bankruptcies in 2022 or an unexpected event, it seems that the easiest path forward is upward.
Nonetheless, looking back at history, it is evident that Bitcoin's path to success is not always a steady climb. It is probable that there will be corrections, even during periods of positive growth.
Publication: Artificial intelligence may be consuming more energy than Bitcoin at the moment, posing a potential threat to Bitcoin mining operations.
With changing economic powers and monetary policies, Bitcoin has shifted from being a niche asset to becoming a legitimate financial option.
Bitcoin's rise to $100,000 signifies that cryptocurrency is here to stay, serving as a protection against inflation, a safe investment option, and a representation of financial independence. Despite its unpredictable nature and intricate workings, the era of cryptocurrency is firmly established and holds the potential to revolutionize the financial landscape.