Bitcoin surged past the $100,000 mark for the first time on Thursday, a momentous achievement that has captured the attention of investors and sceptics alike. This milestone is being hailed as a defining moment for cryptocurrencies, as market confidence grows with bets on a favourable U.S. administration. Investors are now increasingly optimistic that the U.S. will cement digital assets’ place in mainstream financial markets under the leadership of Donald Trump.
As of Thursday, Bitcoin had surpassed $103,000, marking an all-time high of $103,619 before settling at $101,933. Its meteoric rise this year has been fuelled by a surge in institutional investment and the broader acceptance of cryptocurrencies as a legitimate asset class. In fact, the total value of the cryptocurrency market has nearly doubled this year, hitting a record of $3.8 trillion, nearly matching the market capitalisation of Apple, which stands at $3.7 trillion.
A paradigm shift for digital assets
Bitcoin’s remarkable ascent is seen by many as a sign of its shift from a fringe libertarian asset to a prominent player in global finance. “We’re witnessing a paradigm shift,” said Mike Novogratz, CEO of Galaxy Digital. “Bitcoin and the entire digital asset ecosystem are on the brink of entering the financial mainstream,” he added, noting that this momentum has been driven by institutional adoption, advancements in tokenisation, and clearer regulatory frameworks.
Trump’s 2024 election victory, alongside a slew of pro-crypto lawmakers elected to Congress, has sparked optimism in the cryptocurrency community. Investors have rushed to capitalise on the potential of a “crypto-friendly” U.S. administration. Since the election in early November, Bitcoin has surged more than 50%, with U.S. investors leading the charge.
In addition to his election win, Trump has repeatedly expressed his support for cryptocurrencies, including his promise to make the U.S. the “crypto capital of the planet” and stockpile Bitcoin for the country. The U.S. is now preparing for a new wave of crypto regulation, with Trump’s nomination of Paul Atkins to head the Securities and Exchange Commission (SEC). Atkins, a former SEC commissioner, is a long-time advocate of digital assets and is seen as a key player in ushering in more favourable policies.
Bitcoin’s journey through volatility
Bitcoin’s climb to $100,000 is a remarkable recovery, considering its price had plunged below $16,000 in 2022, following the collapse of the FTX exchange. Its founder, Sam Bankman-Fried, was jailed, and the industry faced intense scrutiny. Despite these setbacks, Bitcoin has demonstrated its resilience, and analysts believe that the growing embrace of Bitcoin by large institutional investors has been a driving force behind this year’s rally.
The approval of Bitcoin exchange-traded funds (ETFs) in January has opened the door for large-scale institutional buying. Since Trump’s victory, more than $4 billion has flowed into U.S.-listed Bitcoin ETFs, highlighting the increasing financialisation of digital assets. “Roughly 3% of the total supply of bitcoins that will ever exist has been purchased in 2024 by institutional money,” said Geoff Kendrick, global head of digital assets research at Standard Chartered.
The financialisation of crypto
Bitcoin’s increasing integration into traditional financial systems is evident in the growing number of financial products linked to digital assets. Bitcoin futures were launched in 2017, and options on BlackRock’s Bitcoin ETF debuted in November with strong demand. This year, shares in cryptocurrency-related companies such as Bitcoin miner Marathon Digital (MARA.O) and exchange operator Coinbase (COIN.O) have soared, each gaining approximately 65% in November alone.
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Meanwhile, companies like MicroStrategy, which has raised funds to buy Bitcoin and now holds over 400,000 bitcoins, have also seen their stock prices soar. The firm has gained an eye-watering 542% this year, underlining the increasing appetite for cryptocurrency investments.
Trump himself has also entered the crypto space with the launch of his business venture, World Liberty Financial, though details remain scarce. The support of crypto proponents such as Trump and his ally Elon Musk has only added to the growing excitement in the industry.
Challenges remain
Despite the euphoria, the cryptocurrency industry continues to face significant challenges. Bitcoin’s massive energy consumption and concerns over crypto-related crime are persistent issues. Moreover, the underlying technology has yet to deliver on its promises of revolutionising the global financial system.
However, as Russian President Vladimir Putin pointed out at an investment conference this week: “Who can prohibit it? No one.” The resilience of Bitcoin and its continued growth suggest that, despite its controversies, digital currencies are here to stay. As Shane Oliver, chief economist at AMP in Sydney, noted, “As time goes by, it’s proving itself as part of the financial landscape.” For now, Bitcoin’s momentum remains undeniably upwards.
