Bitcoin hits $100,000
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Illustration: Sarah Grillo/Axios
Bitcoin's price broke $100,000 on Wednesday night, capping a bull run that has seen the original cryptocurrency rise more than 30% since Election Day.
Why it matters: It's a big round number, and also a symbolic one — marking what could be the industry's next stage of long-term growth.
Catch up quick: The landscape for digital assets, and bitcoin in particular, has never looked brighter.
- ETFs launched in January now hold north of $100 billion in assets — making it easier than ever for anyone to buy bitcoin or ether.
- Wall Street, at one time an enemy crypto dreamed of slaying, has become a crucial ally, adding exponentially to the asset's staying power.
- Clear regulations in the U.S., once a pipedream, are now essentially a certainty. An ally's been nominated to lead the SEC, and crypto will soon have a cheerleader in the White House itself.
The big picture: Excitement around what Donald Trump will do for crypto has poured gasoline on the fire of a bitcoin bull run that was already in motion. But bitcoin hitting $100,000 is not just an effect of Donald Trump.
- It's a milestone hit during the fourth of bitcoin's remarkably predictable "cycles," which we'll explain more about in a moment.
- And if six-figure bitcoin in 2024 wasn't itself predictable — it's certainly a number traders had their sights on long before Trump declared his love of crypto back in May.
About that cycle. Bitcoin is once again following the familiar roughly every-four-year cycle that it has shown since 2013.
- Every four years, by design, the amount of new bitcoin that's created each day drops in half, as it did on April 19.
- This decreases the liquid supply. Once that's felt in the market, it causes an uptick in the price. (Warning: most attempts to time it by get-rich-quick schemers inevitably fail.)
Reality check
The Trump effect, and the promise of a friendlier Congress, has surely accelerated bitcoin's climb to today's new high.
- On Deribit, the leading options exchange in the crypto market, people have been betting on $100,000 bitcoin for a while — but activity surged dramatically after the election.
Risks abound for new investors. To name a few:
- If the next Congress can't get its act together on blockchain legislation;
- If the SEC doesn't soften its stance on cryptocurrency in the new administration (though that looks like less of a risk following Paul Atkins' nomination to lead the agency);
- Or if the president-elect changes his mind and starts selling the nation's bitcoin holdings.
Any of those situations would likely slow, or even halt, bitcoin's positive price momentum.
What we're watching: What goes up always comes down, eventually.
- It's highly likely that retail traders have once again piled into bitcoin and other cryptocurrencies, chasing fast cash as they have in prior cycles.
- How far bitcoin falls at the end of this cycle is the question.
Historically, bitcoin has fallen dramatically from its previous three cycle highs, typically to somewhere right around the prior cycle's height of exuberance.
- After BTC peaked just short of $70,000 in 2021, its price ultimately fell to around $20,000, right about where it peaked in the cycle ending in 2017.
- That said, each crypto boom cycle has been driven not just by the halving but also some additional new piece of technology that got people excited. In 2017, it was initial coin offerings; in 2021, it was non-fungible tokens.
This time could be different
If bitcoin's next bear market ends without it losing 80 to 90% of its value from the peak — say more like 50% — we'll know something has changed, perhaps for good.
- The entrance of institutional investors like state pension funds, deep pocketed companies like MicroStrategy and Block, Inc., and nation-states like Bhutan and El Salvador, could soften the next fall.
State of play: Bitcoin's market cap now makes it the 7th largest asset in the world, higher than market values of Tesla, Meta (Facebook) and even silver, the precious metal.
- It's edging close to the value of Amazon and Alphabet.
This puts the original cryptocurrency in a different position than it has ever been in before.
- This could help soften the severe volatility that has always marked the asset class, making more and more people comfortable with including it in their portfolio — whether or not anyone can find two people who agree on just exactly what Bitcoin is really good for.
The bottom line: In May 2010, a programmer famously spent 10,000 bitcoins to have two (large) Papa John's pizzas delivered.
- Today, 10,000 BTC (worth $1 billion) could buy nearly 65% of Papa John's International — the company.
