Bitcoin is scratching the $100,000 milestone for the first time ever.

Is it a sign of finally becoming mainstream or not? And whats behind? Lets take a look.

First and foremost, due to the relatively small market cap, cryptocurrencies are manipulative markets. Don't forget that. The prices going up and down, although catching users' attention worldwide, these are not at all the indications of whether the crypto assets becoming mainstream or not. Don't think the prices will go up forever. Never think that. The bull market is usually a year max.

Now that you are clear about the manipulative nature of this market, lets look a bit further.

Bitcoin’s value has increased by almost 160% this year alone and it’s a matter of time before it will hit the $100,000 mark.

What are the drivers behind this spectacular rise?

1. There are high expectations from the newly US elected government that they will take a very friendly crypto approach. The optimism is based on the stance that the new US president has taken throughout the US election campaign with statements such as making US the crypto capital of the planet. It is indicative that since the US election results Bitcoin’s value has increased by more than 40%.

2. The US SEC (Securities and Exchange Commission) Chair, Gary Gensler, who has famously taken a cautious approach against crypto, has announced that he is stepping down in January and it is widely rumored that the new Chair will follow a much more favorite approach. In short: deregulation.

3. SEC has already approved both Bitcoin ETFs and Spot Ether ETFs. Crypto ETFs are ETFs that track the value of main cryptocurrencies (i.e. Bitcoin, Ethereum) and trade on traditional exchanges (vs crypto exchanges). Why does this matter? Because Crypto Spot ETFs democratize (crypto) investing. They offer regulated and therefore safer and more transparent access to something that has already been on the radar of investors (not only private but also wealth advisers and hedge funds) for years.

4. Many of the already announced high-level policies of the new US government such as tax cuts (that might lead to fiscal challenges) and tariffs (that are associated with higher inflation) can indirectly positively impact crypto from a macro perspective.

5. In April 2024 the latest Bitcoin halving took place. This is an event happening every 4 years and it means that the reward for mining a Bitcoin is cut in half. The halving makes Bitcoin scarcer, which increases its value. It has not been the main driver but it sparked interest and contributed to the price increase.

What do all the above mean for the future? Here are a few things to keep in mind:

• Bitcoin’s volatile nature remains. The dramatic ups and downs that we have seen in the past can very well be repeated without any warning.

• The $100,000 might be hailed as a milestone but it’s mostly a psychological number. If you look back at Bitcoin’s history, you will notice that the same was the case with$100 or $1,000.

• Discussions about the $100,000 are about the short-term. Bitcoin’s long-term performance will very much depend on regulation, policies and macro developments.

Author

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