Bitcoin Surges Past $100,000!
The rise of Bitcoin over the last 15 years has been nothing short of meteoric. Originally introduced at the tail end of the global financial crisis in 2009, Bitcoin has captured the imagination of investors and the general public alike. What started as a mere cents-per-coin phenomenon has remarkably surged to a threshold of $100,000, marking a significant milestone in its journey. Experts suggest that crossing this psychological barrier may herald the dawn of a new bull market for cryptocurrencies.
On Thursday, dreams became reality for crypto enthusiasts as Bitcoin officially surpassed the $100,000 mark. This milestone was no spur-of-the-moment event; it came after a month characterized by continuous price increases, during which Bitcoin exhibited a pattern of repeatedly hovering near that coveted figure, only to pull back temporarily. Such oscillations have become familiar in the vibrant world of digital currencies, where price volatility is a hallmark.
Recently, during an investor day event held by Robinhood Markets Inc. in New York, legal chief Dan Gallagher suggested that the company’s new hire, Atkins, was perfectly suited for the challenging environment of cryptocurrency regulation. Gallagher, who made waves when he withdrew his consideration for a role with the SEC in November, expressed optimism that Atkins would tackle the complex issues surrounding enforcement and regulation in this burgeoning industry right from day one.
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With this remarkable rise, Bitcoin’s market capitalization has ballooned to just under $2 trillion, positioning it as a more substantial investment asset than many traditional assets, trailing just behind industrial giants like Nvidia, Apple, and Alphabet Inc. Furthermore, this valuation is more significant than the government bond markets of entire nations such as Spain and Brazil, and it nearly matches the total market value of the UK’s FTSE 100 index.
Fadi Aboualfa, head of research at Copper Technologies Ltd., pointed out that Bitcoin's ascension to $100,000 signals the commencement of a new phase in its bull run. Notably, he emphasized that Bitcoin appears resilient to various external shocks, maintaining its upward trajectory amidst an increasingly complex financial landscape.
For many investors in the crypto sphere, reaching the $100,000 milestone was always seen as an inevitability. Hedge fund manager Anthony Scaramucci made headlines in September by predicting that Bitcoin would achieve this feat by the end of the year, mirroring the sentiments of billionaire Michael Novogratz earlier in June. In fact, prominent strategists from major banks like JP Morgan and Goldman Sachs have been forecasting that Bitcoin would eventually breach the six-figure territory for nearly four years now.
The inception of Bitcoin can be traced back to the wake of the 2008 financial crisis, when an anonymous figure known as Satoshi Nakamoto introduced it to the world in 2009. The identity of Satoshi, whether an individual or a collective, has been a source of speculation since Bitcoin's creation.
This year, Bitcoin experienced a staggering cumulative increase of 135% by reaching the $100,000 milestone. Nonetheless, this isn't the first time Bitcoin has showcased such dramatic price fluctuations. For context, at the end of 2010, Bitcoin was valued at approximately $0.30; however, it suffered a staggering 64% decline in 2022 yet rebounded to rise by 157% the following year. The asset has witnessed its price surge by 1375% in 2017 and 5428% in 2013, alongside a remarkable 1317% increase in 2011.
Bitcoin's journey from a few cents to a substantial $100,000 has been accompanied by considerable concern and skepticism, often articulated in the form of "FUD" — a term that encapsulates fear, uncertainty, and doubt. The cryptocurrency market has often been a breeding ground for misuse by various criminals, including fraudsters, ransomware creators, money launderers, and hackers, adding a layer of reputational risk to the asset class.
This year witnessed Bitcoin's remarkable return to form after an unprecedented period of decline. Bitcoin reached a previous record high of over $73,000 in March, originating from one of the most severe downturns in its history. Following a nearly 80% plunge between November 2021 and November 2022, the market experienced a domino effect of collapses, including the implosion of the FTX exchange and the bankruptcies of lending entities like Genesis and Celsius. Legal repercussions ensued, resulting in the founding figure of FTX, Sam Bankman-Fried (SBF), receiving a 25-year sentence for fraud, while Binance’s Changpeng Zhao faced four months for failing to implement adequate anti-money laundering measures.
In spite of the cryptocurrency market's troubled past, Bitcoin’s acceptance within mainstream finance continues to increase. As Bitcoin’s profile grows, this once volatile asset class is nearing a point where it may indeed have systemic significance within the global financial system.
The surge in Bitcoin’s prices this year can be attributed, in part, to the introduction of spot exchange-traded funds (ETFs). These investment vehicles at last allow investors to gain direct exposure to Bitcoin, having emerged after prolonged legal battles involving major players like Grayscale and the SEC. Wall Street titans such as BlackRock, Fidelity, and Grayscale have helped drive the popularity of these ETFs, which currently hold approximately $100 billion in assets — roughly 5% of the total Bitcoin supply.
According to Manuel Villegas, a digital asset analyst at Julius Baer, the firm sees strong underlying demand. He anticipates that Bitcoin may encounter supply constraints again next year, echoing conditions from the previous year when demand growth significantly outstripped supply, resulting in considerable price increases.