Bitcoin Surpasses $100,000!

The past fifteen years have been nothing short of revolutionary for Bitcoin, transforming from a mere few cents to a staggering $100,000. As this cryptocurrency crossed the half-million mark, analysts indicated that this milestone heralds the onset of a fresh bull market phase in the crypto sphere.

Last Thursday was a significant day for cryptocurrency enthusiasts, as Bitcoin finally broke through the $100,000 threshold. This price point, which is often perceived as the holy grail by crypto investors, had been approached several times over the previous month only to retract and leave many investors in suspense.

Several factors contributed to this optimistic surge. A prevalent belief in the digital asset sector is that the new U.S. administration will pivot from the harsh scrutiny imposed by the previous administration, favoring more accommodating policies and regulatory frameworks for the digital asset industry.

On Wednesday, a pivotal event solidified this optimism, as the nomination of Atkins—a known advocate for cryptocurrency—to replace Gary Gensler as the chair of the U.S. Securities and Exchange Commission (SEC) was announced.

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Dan Gallagher, the legal chief at Robinhood Markets Inc., remarked at an investor day event in New York, stating, "Atkins is perfectly suited for this role." Gallagher had previously resigned from his SEC position consideration and expressed expectations that Atkins would address the regulatory challenges facing the industry from the outset of his appointment.

This recent leap to $100,000 catapults Bitcoin's market capitalization to just under $2 trillion, positioning it as a larger investment asset than some of the most prominent public companies like Nvidia, Apple, and Alphabet Inc. It also surpasses the sovereign bond markets of nations like Spain and Brazil and draws near to the total market capitalization of the UK's FTSE 100 index.

Fadi Aboualfa, head of research at crypto custody firm Copper Technologies Ltd., stated, "Bitcoin reaching $100,000 signifies the start of the next bull market phase. It now appears resilient to any external shocks besides peripheral impacts."

Before this leap, many cryptocurrency investors viewed the $100,000 price point as inevitable. Hedge fund manager Anthony Scaramucci predicted in September that Bitcoin would reach this landmark by year-end, while billionaire Michael Novogratz echoed the sentiment in June. Even strategists at banks like JPMorgan and Goldman Sachs forecasted nearly four years ago that Bitcoin would ultimately reach six figures.

Launched in 2009 by its pseudonymous creator Satoshi Nakamoto during the aftermath of the global financial crisis, Bitcoin was born into a world that remains fascinated by the enigma of its creator’s identity—whether a single person or a collective remains a topic of speculation.

This year, as Bitcoin surged by an impressive 135% to hit the $100,000 mark, it marked yet another chapter in its history of stunning price volatility. From a mere 30-cent value in late 2010 to this year’s heights, Bitcoin has navigated major turmoil and bursts of speculative interest—specifically during its drops, such as the dramatic 64% decline in 2022 followed by a whopping 157% increase last year. Historical growth rates are staggering, with gains of 1375% in 2017, 5428% in 2013, and 1317% in 2011.

This meteoric rise saw Bitcoin overcome significant fears, uncertainties, and doubts—widely referred to as "FUD" in trading circles. The cryptocurrency sector has long been plagued by associations with fraudsters, ransomware creators, money launderers, and hackers.

One of the most notable recoveries in Bitcoin's saga came when it rebounded above its previous peak of $73,000 earlier this year. This marked a dramatic comeback from one of the most tumultuous periods in its history, where it experienced a nearly 80% decline from November 2021 to November 2022. That bearish market was characterized by a series of disastrous collapses, notably the implosion of the FTX exchange and the failures of crypto lenders like Genesis and Celsius. Following these events, regulatory crackdowns ensued, resulting in the conviction of FTX co-founder Sam Bankman-Fried on fraud charges, leading to a 25-year prison sentence, and a four-month sentence for Binance founder Changpeng Zhao due to failures in anti-money laundering controls.

Despite the tumultuous past of the cryptocurrency market, Bitcoin has steadily gained acceptance in mainstream financial systems. As its scale increases and it becomes more entrenched in the global economy, the implications of such a volatile asset inch closer to having systemic importance within the financial framework.

This year's increase in Bitcoin's price can largely be attributed to the popularity of spot exchange-traded funds (ETFs), which have arisen following extensive legal battles between one of the issuing firms, Grayscale, and the SEC. These ETFs, launched in January, allow investors to make direct investments in Bitcoin.

In the current landscape, ETFs led by Wall Street giants such as BlackRock, Fidelity, and crypto-native firms like Grayscale manage approximately $100 billion in assets, representing around 5% of all circulating Bitcoin.

The prospect of a "supply crunch" is on analysts' minds. Manuel Villegas, a digital assets analyst at Julius Baer, stated, “Demand fundamentals are solid. I believe we might see a repeat of Bitcoin's supply tightening next year similar to what we thought would only push prices higher (where demand outpaces supply significantly).”

During a Bitcoin conference in July, ambitious proposals aimed at establishing a cryptocurrency strategic reserve were put forth, starting with assets seized by the U.S. government.

Additionally, at the same conference, allies such as Robert F. Kennedy Jr. and Republican Senator Cynthia Lummis floated the idea of the government purchasing one million Bitcoin (valued at around $100 billion at current prices) as a means to support the dollar.