Bitcoin has captured global attention once again as its value approaches an unprecedented $100,000, doubling its worth in 2024 and rising by approximately 130% this year. Originally launched in 2009 as the first cryptocurrency, bitcoin operates without the need for banks, relying instead on decentralized blockchain technology to validate transactions.
This year’s surge has been attributed to what market analysts are calling “Trump trades,” a series of market movements following former U.S. President Donald Trump’s victory in the November 5 election. Trump’s vocal support for digital assets, coupled with his family’s ventures into the cryptocurrency industry, has fueled optimism among investors.
The Trump family recently launched World Liberty Financial, a crypto-focused firm, and Trump Media and Technology Group is reportedly in talks to acquire crypto trading platform Bakkt. Additionally, Trump has appointed Tesla CEO Elon Musk and entrepreneur Vivek Ramaswamy to co-lead the newly formed Department of Government Efficiency (DOGE), a nod to the cryptocurrency Dogecoin.
Despite the enthusiasm, financial experts continue to stress the risks inherent in the crypto market. “Remember that bitcoin and crypto are highly volatile, and may be more susceptible to market manipulation than securities,” noted Fidelity Investments in a primer for potential investors. Furthermore, the absence of comprehensive regulatory protections leaves crypto holders vulnerable to significant losses.
Understanding Bitcoin
Bitcoin was created by an anonymous figure or group known as Satoshi Nakamoto and is capped at 21 million tokens. It is “mined” by computers solving complex algorithms to validate transactions on its blockchain, a digital ledger designed to prevent fraud. So far, about 19 million bitcoins have been mined, with the remaining supply set to decrease over time due to programmed “halving” events that occur every four years, limiting the creation of new tokens.
Currently valued at nearly $98,000 per token, bitcoin is often purchased in fractional shares. Investors can acquire bitcoin through exchanges like Binance.US or via online brokers such as Fidelity and Robinhood. For those seeking indirect exposure, bitcoin-based exchange-traded funds (ETFs) approved by the Securities and Exchange Commission (SEC) allow individuals to invest without navigating crypto exchanges.
Practical Uses and Concerns
Bitcoin’s utility has expanded, enabling users to purchase goods and services, including luxury items and even art. Companies such as AT&T, Microsoft, and Tesla now accept cryptocurrency as payment. Bitcoin debit cards also allow holders to use their assets like traditional currency.
However, skeptics remain wary. Warren Buffett famously predicted in 2018 that cryptocurrencies would “come to a bad ending.” High-profile incidents like the collapse of FTX, which left customers with $8 billion in losses, underscore the market’s inherent risks.
Despite these challenges, bitcoin’s advocates point to its recent gains as a sign of its staying power. SkyBridge Capital founder Anthony Scaramucci predicts bitcoin could exceed $170,000 by mid-2025, while Ark Invest CEO Cathie Wood envisions a meteoric rise to $1.48 million by 2030.
As bitcoin continues its ascent, the debate surrounding its stability and long-term potential is far from over, making it a focal point for investors and policymakers alike.