Bitcoin Surges to $100,000 – and Here’s Why
Created in 2008, Bitcoin was the world’s first cryptocurrency. For better or worse, Bitcoin’s continued rise to prominence has been less as a new-age form of digital currency and more as a type of high-risk investment. Let’s be honest, how many people do you know who have actually used Bitcoin, or any other type of cryptocurrency, to pay for something?
In its first few years as a digital currency, the value of a single Bitcoin was less than $0.10. In 2017, its price quickly jumped to $2,000, then to $5,000, before eventually breaking the $10,000 mark. This soon triggered a flood of investor dollars seeking quick returns. More importantly, it caught the attention of Wall Street. By 2021, Bitcoin had risen to more than $60,000.
On Nov. 4, the day before the U.S. presidential election, the price of Bitcoin was at $67,811. The day after the election, on Nov. 6, Bitcoin quickly surged to $75,637, a new record high. On Dec. 4, it breached the $100,000 mark and closed at $103,340. That’s right. In just one month, Bitcoin had gained more than $35,000, an increase of 52%. So, what caused this sudden surge in Bitcoin?
During their respective campaigns, both Donald Trump and Kamala Harris advocated for a more government-friendly relationship with the cryptocurrency industry. This was in stark contrast to the Biden administration which aggressively used regulatory agencies – especially the Securities & Exchange Commission (SEC) – to crackdown on cryptocurrency exchanges and investors.
But Trump’s support for the cryptocurrency industry was much more vigorous and expansive. In July, at a Bitcoin conference in Nashville, TN., Trump vowed to make the U.S. “The crypto capital of the planet.” After he won the presidential election on Nov. 5, investors sent Bitcoin’s price soaring.
A key element of Trump’s strategy is to remove current SEC Chair Gary Gensler, who led much of the Biden administration’s crackdown on the cryptocurrency industry. Gensler will likely be replaced by Paul Atkins, Trump’s presumptive nominee. Atkins is currently CEO of Patomak Partners, a financial consulting firm. He also served as an SEC Commissioner from 2002-08. It’s expected Atkins will be less antagonistic towards the cryptocurrency industry and will be more apt to embrace Trump’s broader deregulation goals.
Trump has also announced that David Sacks will be the nation’s first “AI and crypto czar.” Sacks is a venture capitalist with an expansive list of investing in high-tech companies including PayPal, Palantir, SpaceX and Facebook, among others. In his new role, Sacks will look to refine and provide clarity to the often-confusing U.S. legal framework that governs the cryptocurrency industry.
The biggest knock against Biden was that his regulatory oversight over the cryptocurrency industry was too heavy-handed. It forced much of the investment and technological innovation within the industry to flee the U.S. and move overseas – primarily to competing markets in Asia. But there is also significant risk for Trump if his regulatory framework is too lax. The cryptocurrency industry has a long, painful history of fraud, theft and corruption.
Many would likely agree the goal should be to allow investment and innovation within the cryptocurrency industry while also providing a framework of consumer protections. It’s a delicate balancing act. We’ll see if Trump succeeds.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Quad Cities Investment Group and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Quad Cities Investment Group unless a client service agreement is in place.
