It’s a sweet, sweet 16 for bitcoin as the flagship cryptocurrency passed the $100,000 mark Wednesday evening.
After weeks of flirting with the threshold, bitcoin’s exchange rate with the dollar crossed the six-figure line, bolstered by the expectation of crypto-friendly policies from the Trump administration and a booming stock market from which some are looking to diversify.
Exactly one year ago, bitcoin, which was created in 2009, was valued at around $44,000 — 127% less than the current rate.
Bitcoin’s worth has steadily risen since the beginning of the year, when the Securities and Exchange Commission approved exchange-traded funds that track the price of the cryptocurrency. These funds, which can be bought and sold on an exchange, established a bridge from traditional finance to crypto and lent legitimacy to bitcoin.
But the steep rally began last month after Donald Trump won the presidential election and voters elected what Brian Armstrong, CEO of cryptocurrency exchange Coinbase, called “America’s most pro-crypto Congress ever,” courtesy of millions spent by industry super PACs and billionaires.
Political tides, coupled with investors trying to diversify their assets away from the roaring stock market, led to bitcoin’s rise in value, said Maura O’Neill, an expert in cryptocurrencies and blockchain at UC Berkeley’s Haas School of Business. “People are looking for diversification in an uncertain world, and they see an incoming U.S. president who is more friendly to crypto,” O’Neill said.
Washington is home to an expansive and organized network of pro-crypto advocates, who are lobbying Trump to choose crypto-friendly financial regulators and pushing Congress to give the industry a regulatory roadmap to becoming mainstream.
Trump, a onetime crypto skeptic, showed an affinity for bitcoin on the campaign trail when he bought a round of burgers for supporters at a bitcoin-themed bar in New York. He has pledged to establish a “strategic national bitcoin stockpile” and has nominated conservative lawyer Paul Atkins, a critic of the SEC’s cryptocurrency policies under President Biden, to run the agency.
Bitcoin is the original decentralized cryptocurrency created by the elusive Satoshi Nakamoto. With the rise in value, it now accounts for 52% of the $3.7 trillion cryptocurrency market.
$100,000 is, no doubt, an arbitrary number. But for “bitcoin maximalists” — people who believe that it is the only digital asset that will be needed in the future — it’s a significant milestone toward bitcoin’s dominance over other cryptocurrencies.
How long the rally will continue is anyone’s guess. Because there’s no central bank watching over bitcoin, it is prone to significant volatility. “If you look at the history of bitcoin over the past three or five years, there are big peaks and troughs,” said O’Neill. “But ultimately over time, there’s been a significant increase.”
For crypto to truly flourish, O’Neill said, the Trump administration will have to implement regulatory guardrails that protect consumers and investors from an FTX-like situation. The collapse of the exchange helmed by Sam Bankman-Fried in 2022 eroded public trust and kicked off a “crypto winter.”
Konstantin Richter, CEO of Blockdaemon, a blockchain infrastructure company, concurs that what the industry needs is regulatory clarity.
“Bitcoin recently turned 16, marking a significant milestone, but also making bitcoin a teenager,” said Richter, who is based in the Bay Area. Richter said his company is seeing growing demand for its crypto infrastructure, but it’s early days for the industry.
“Many companies [have] moved offshore, which has been a setback for the industry,” Richter said, attributing the flight from the U.S. to the Biden administration’s hostility toward crypto.
Richter hopes that regulation will allow mature crypto companies to go public and encourage more founders to build their companies in the U.S. “The future certainly looks bright.”