The cryptocurrency market experiences a significant milestone as Bitcoin surpasses the notable $100,000 mark, signifying its journey from a niche cypherpunk concept to widespread acceptance in the financial world.
Bitcoin, which was originally seen as a niche investment for a small group of people interested in cryptography and technology, has steadily increased in value over the years. Its price has gone from $1 in 2011 to $1,000 in 2013, and has now reached over $100,000 in 2024.
The recent rise in Bitcoin's value shows how it has transformed from an experimental idea to a recognized and valuable 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 consistently recovered and surpassed expectations.
Mikko Ohtamaa, a co-founder of Trading Strategy, believes that the next two to three years are crucial for demonstrating how cryptocurrency can positively impact the world. He sees this as a final opportunity to make a significant impact, and he is optimistic about the current favorable conditions in the market.
"The past decade has been filled with speculation, but it's time to shift towards practical use in the real world." This current surge in the market is unique because of several important distinctions.
Bitcoin is now seen as more than just a risky investment opportunity, as it has gained recognition as a secure asset, protection against inflation, and a legitimate asset class that is increasingly being adopted by institutions.
Original source: Cynthia Lummis
Spot-based ETFs in countries like the US and Hong Kong have made investing more convenient, and the election of crypto-supportive president Donald Trump in the US has been seen as a positive development for the cryptocurrency sector.
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During Trump's campaign, he vowed to appoint a new Securities and Exchange Commission Chair to replace Gary Gensler. Gensler is viewed negatively in the cryptocurrency community because of his tough enforcement tactics.
Investors are optimistic that this change could lead to fewer obstacles from regulations, creating a more favorable environment for cryptocurrency assets. Gensler's time in office, characterized by a strategy of enforcing regulations rather than providing clear guidelines, has faced significant criticism from the industry.
The road to reaching $100,000 for Bitcoin was not straightforward. It involved unpredictable fluctuations in price, sudden market crashes, and moments of uncertainty about the future of the cryptocurrency.
One of the significant moments of struggle for Bitcoin was when its value dropped from $1,000 in 2013 to $200 in 2014. The downfall of Mt. Gox, the biggest Bitcoin exchange at that time, had a major impact during this period. Even now, ten years later, the payouts to its creditors are still being discussed.
By the end of 2017, the price of Bitcoin soared to almost $20,000 due to the popularity of initial coin offerings (ICOs). But, regulations were put in place in the US regarding ICOs being considered as unregistered securities, and China went as far as banning them completely. As a result, by December 2018, the value of Bitcoin had dropped significantly to $3,200.
A recent study has found that a majority of Initial Coin Offerings (ICOs) conducted in 2017 were fraudulent
In 2021, Bitcoin saw a significant increase in value, reaching $63,000, with support from institutions and well-known companies like Tesla, led by Elon Musk.
Origin: Arkham Intelligence
However, excitement for Bitcoin was subdued due to regulatory pressure, particularly in China where a crackdown on Bitcoin mining caused the price to plummet to $29,000. After reaching a peak of $69,000 in November 2022, Bitcoin's value dropped significantly to $15,000 amidst turmoil in the broader cryptocurrency industry. This turmoil was exacerbated by FTX's collapse, Three Arrows Capital's downfall, and the crisis surrounding the Terra-Luna stablecoin.
As of 2024, Bitcoin has experienced a significant increase in value. The approval of spot Bitcoin ETFs by the SEC earlier in the year allowed more people to participate in trading, and the election of Trump in November has further boosted the market rally.
According to market analyst Justin d'Anethan, the current driving forces behind Bitcoin's growth are factors such as increased accessibility through ETFs, interest from corporations, and rising investments from institutions worldwide. Additionally, the shift away from the dollar in BRICS economies is also contributing to Bitcoin's appeal as a potential hedge in a changing global financial landscape that is reevaluating the role of traditional reserve currencies.
Why is $100,000 significant for Bitcoin?
To Bitcoin enthusiasts, $100,000 represents more than just a numerical value. It serves as a psychological milestone that confirms their unwavering belief in the cryptocurrency, as demonstrated by the popular "laser eye" trend on social media.
However, d'Anethan clarified that the objective is not just to reach $100,000.
In the last year, the increase in Bitcoin's value has primarily been influenced by experienced investors. Corporate treasuries, such as MicroStrategy, have shown interest, along with the emergence of ETFs and pension funds investing in BTC, all without much attention.
"Individual investors have not yet heavily invested, and once they do, the excitement will not end at $100,000."
There have been differing opinions on Trump's campaign suggestion of a strategic reserve of Bitcoin.
Author Ed Krassenstein and Impure Hoonter collaborated on this source.
There are mixed opinions on whether it is a step towards centralization or not. Quary, the founder of Bitcoin marketplace Magisat, believes that it does not affect Bitcoin's decentralized principles.
According to Quary, the individual who possesses Bitcoin does not have any impact on the functionality of the network.
It is hoped that both the US and BRICS countries (Brazil, Russia, India, and China) share a common interest in Bitcoin and both have significant holdings in the cryptocurrency. The ideal situation would be a decentralized network where all parties can participate without bias.
What lies ahead for Bitcoin?
Reaching $100,000 is seen as a significant milestone, but for many, it marks the start of a bigger narrative for Bitcoin.
In the near future, as the US Federal Reserve is expected to continue lowering interest rates, Bitcoin may benefit from a positive overall economic environment for high-risk investments.
According to d'Anethan, as long as there are no significant liquidations due to bankruptcies in 2022 or unexpected events, it seems that the easiest path forward is upwards.
Nevertheless, looking at past events, Bitcoin tends to not have a consistent upward trend. It is common for there to be corrections, even during times of positive growth.
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With economic powers changing and monetary policies evolving, Bitcoin has gone from being a niche asset to a practical financial option.
Bitcoin's rise to $100,000 signifies that cryptocurrency is becoming increasingly established and accepted as a valuable asset, whether as protection against inflation, a secure investment, or a representation of financial independence. This indicates that the era of cryptocurrency is here to stay, with its unpredictable price fluctuations, intricate nature, and potential to revolutionize the financial world.