Last spring, I publicly predicted that the price of Bitcoin would hit $100,000 by the end of 2024. This was quite a statement given BTC prices were then trading in a range of $40,000 to $50,000. While the path would be volatile, I predicted that “the long-term trend over this year and into 2025 would be up and to the right.” Recently trading above $99,000, Bitcoin prices are up over 40% since Election Day, and 130% year-to-date. My “extremely bullish” view now seems conservative.
What is driving Bitcoin’s remarkable performance? After four years of persecution by the Biden administration, the crypto community holds forth substantial hope that the Trump administration will take a much more user-friendly approach to digital assets. Trump has committed to unwind many of the “regulation by enforcement” actions put in place under the Biden administration, and to work with Congress to implement a constructive legislative framework for crypto regulation.
Trump has promised to fire SEC Chair Gary Gensler, one of the most hostile anti-crypto regulators, on day one. Gensler’s SEC is also being sued by 18 U.S. states for “unconstitutional regulatory overreach” on crypto. Getting the message, Sec. Gensler has proactively resigned from his position effective January 20th.
Trump has advocated for a U.S. Strategic Bitcoin Reserve, creating large demand which would be bullish for the cryptocurrency. This move would also likely compel other countries to start accumulating Bitcoin alongside the U.S.
While the entire crypto industry has generally benefited from the Trump victory, the spoils have not been split equally. Bitcoin has been the dominant winner, and now represents some 60% of the $3.3 trillion in total market value of crypto assets. Ethereum, the second largest network (excluding stablecoins) with $400 billion in market value, has not benefited from the euphoria. Despite great promise to be the “world’s computer,” ETH values remains 30% below its all-time high achieved in November 2021. Solana, the third largest network, has performed well, up over 50% since November 5th. The SOL token is now testing its all-time high achieved hit three years ago. Stablecoin volumes have skyrocketed.
Investors also see Bitcoin as an attractive store of value. Because of its finite supply and increasing difficulty to mine additional tokens, Bitcoin is viewed as a hedge against inflation, the loss of purchasing power, and the continued debasement of fiat currencies, including the U.S. dollar.
While the recent rapid rise of BTC prices seems extraordinary, we may have only begun to see the ascendant power of Bitcoin as digital gold.