The digital currency seems to have the wind at its back these days.
An ongoing post-election surge drove Bitcoin’s price above $100,000 for the first time last week. The chart below shows that the world’s largest digital currency has rallied an astronomical amount over the past five years – a whopping 1250%.
Bitcoin Value Growth From 2019-2024
Source: Bloomberg, calculations by Horizon Investments, data as of 12/10/2024. This is not a recommendation to buy or sell any asset. Please see disclosures at the end of this post.
Several recent developments in the cryptocurrency have fueled that gain:
- Political support: President-elect Trump has dramatically changed his tune and strongly promotes Bitcoin and crypto-friendly government policies after disparaging cryptocurrency and calling it a scam.
- More relaxed regulations: Trump recently nominated a cryptocurrency advocate to head up the U.S. Securities and Exchange Commission, which investors predict will lead to looser regulations and enforcement against digital asset platforms.
- Greater liquidity and investment opportunities: Rather than owning Bitcoin directly, investors, as of this year, can purchase shares of highly liquid “spot” ETFs that hold Bitcoin and attempt to track its price. This development has made it easier to buy and sell Bitcoin effectively.
- Corporate buying: Tech company MicroStrategy—whose stock has been one of 2024’s overperformers—has been buying large quantities of Bitcoin lately, driving interest in the currency.
- Enhanced credibility: Federal Reserve Chair Powell labeled Bitcoin as a speculative asset comparable to gold (not a competitor against the dollar), boosting its credibility in the marketplace.
The upshot: Investors increasingly accept Bitcoin as a legitimate (albeit speculative) asset class that may deserve consideration rather than feeling like a coin flip.
