Bitcoin (BTC) has chalked up another record high after shooting past $89,000 for the first time in history.
The world’s largest cryptocurrency soared more than 10% against the US dollar on Monday alone to tap out at $89,530.
Although the BTC/USD pair has partially reversed this morning, it remains in a heady position at $86,300 at the time of writing.
Bitcoin's year-to-date performance – Credit: tradingview.com
Taking stock
Bitcoin has doubled in value in 2024.
At the start of the year, one bitcoin sold for a spot price of $44,200 while the circulating supply held a market capitalisation of $880.7 billion.
Today, bitcoin’s market cap is hovering around $1.73 trillion, putting it above two Magnificent Seven stocks (Tesla (NASDAQ:TSLA) Inc and Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB)) but below Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and Nvidia.
The amount of bitcoin held in US-based exchange-traded funds (ETFs) has gone from nothing to nearly $27 billion after they won regulatory approval in January.
According to Bloomberg analyst James Seyffart, yesterday saw ETF trading volumes of $7.22 billion, marking the sixth strongest day on record.
Massive $7.22 billion trading day for the US spot #Bitcoin ETFs. Highest volume day since March 14. And the 6th highest day of all time.BlackRock (NYSE:BLK)'s $IBIT lead the way with $4.6 billion followed by Fidelity's $FBTC also squeaking past the $1 billion level https://t.co/1ThfMBz2PD pic.twitter.com/erjYvRe9Ph
— James Seyffart (@JSeyff) November 11, 2024
On-chain data suggests that this substantial growth in market value has not coincided with similarly higher usage rates.
Unique addresses on the bitcoin ledger have fallen this year, while daily transactions have fluctuated but have not necessarily shot up.
This is a clear indication that bitcoin’s status as an investment asset is steadily overtaking its status as a decentralised currency/fiat alternative.
Bitcoin’s annus mirabilis
So, why all the gains?
Numerous factors conspired together to thrust bitcoin into the limelight this year.
First off, the US Securities and Exchange Commission (SEC)’s approval of spot-bitcoin ETFs in January ushered in a new era of institutional bitcoin adoption.
Following the approval, major asset managers including BlackRock, VanEck and Fidelity were allowed to list their bitcoin investment products on the New York Stock Exchange, opening the spot market up to billions of dollars worth of traditional investment capital.
Large-scale inflows instantly ramped up.
2024 also saw the latest bitcoin Halving, which only happens once every four years (this time in April).
Halving is an event programmed into the Bitcoin network that cuts the reward for mining new blocks in half.
At the most basic level, it is an anti-inflationary protocol intended to keep bitcoin’s circulation in check. Historically speaking, bitcoin has always surged in value after a Halving.
Then came the reelection of Donald Trump, who positioned himself as the true pro-crypto candidate who will protect the industry from overreaching regulation and hawking SEC commissioners.
“On day one, I will fire (SEC chair) Gary Gensler,” Trump declared during his presidential campaign.
He vowed to create a “bitcoin and crypto presidential advisory council” to make rules “written by people who love your industry, not hate your industry”.
“If crypto is going to define the future, I want it to be mined, minted and made in the USA,” he added.
Collapsing barriers
Speaking on the latter point, Eddy Travia, chief executive of Web3 investor Coinsilium Group Ltd, today told Proactive: “The bitcoin price is moving up as the market perceives some barriers to the growth of the bitcoin and wider cryptocurrency ecosystems will soon disappear, such as the regulatory pressure from the SEC which the Trump administration has promised to alleviate.
“There have also been discussions in the US Senate about a Strategic Bitcoin Reserve (the Bitcoin Act) meant to strengthen America’s balance sheet; it is still early to know if it will be ratified but the proposal itself is a clearly positive development for the status of bitcoin as a legitimate store of value."
The rising bitcoin tide has lifted other ships with it.
Coinbase Global Inc (NASDAQ:COIN) has rallied over 65% in the past week while Microstrategy Incorporated, which is the largest corporate owner of bitcoin, has surged around 46%.
Other large-cap cryptocurrencies have also shot up, with Ethereum (ETH) adding 35%, Solana (SOL) adding 32%, Ripple (XRP) adding 27% and Dogecoin (DOGE) a walloping 129%.
DOGE’s close association with the world's richest man and Trump surrogate Elon Musk has supported its supersized rally.