Bitcoin prices have soared in recent weeks, gaining 172% in the previous 12 months and 45% in the past month alone.
The Bitcoin price has never hit $100,000 in its history but that threshold could soon be breached.
Wes Wilkes, chief executive at Net-Worth NTWRK, says that "$100,000 bitcoin seems inevitable.”
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Donald Trump winning re-election to the White House is the major catalyst for the digital asset's recent push towards $100,000.
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“Investors are flocking to Bitcoin in a digital gold rush, and the whole cryptocurrency market continues to show unbridled enthusiasm,” says Gabriel McKeown, head of macroeconomics at Sad Rabbit Investments.
Can bitcoin stay above $100,000?
Bitcoin may well hit $100,000 in the coming days. Staying there could be harder.
McKeown says that, while the potential for gains even at current levels remains, “with bucketloads of economic uncertainty still on the horizon, there is substantial downside risk”.
Bitcoin’s reputation as a volatile asset is well-earned. While tipping over $100,000 could be interpreted as a signal of its increasing prominence as an asset class, it could also lead to profit-taking, which could prompt a rapid pullback.
So, should you invest in Bitcoin as it nears $100,000?
“Investors should remember that Bitcoin tends to act more as a speculative asset, and the price of cryptocurrencies can fluctuate dramatically based on market sentiment and a FOMO mentality,” says McKeown.
Simon Peters, crypto analyst at eToro, offers a more optimistic outlook over the longer term. “Even with the $100k milestone reached, we would still be reasonably early in this bull market if past years and cycles are anything to go by," he tells MoneyWeek.
"Historically the peak of the bitcoin bull market has formed 12-18 months after the block reward halving." This happened most recently in April 2024.
However, Peters also acknowledges the potential for sharp drawdowns. "If the price reaches as significant a milestone as $100,000 against the backdrop of the holiday season, I wouldn't be surprised to see a pull back from this level, as investors take some money off the table before the trend continues on.”
How have the halving and bitcoin ETFs pushed bitcoin to $100,000?
In January this year, the Securities and Exchange Commission (SEC) approved the launch of ETFs that track the spot price of Bitcoin in the US for the first time ever.
These products are viewed as having had a major impact on the price of Bitcoin, as they increased the accessibility and availability of the cryptocurrency.
The funds registered inflows of approximately $8 billion in their first two months, and marked a milestone of institutional interest as the financial institutions behind the ETFs – such as BlackRock (NYSE:BLK), which launched the iShares Bitcoin Trust ETF (NASDAQ:IBIT) – added Bitcoin to their balance sheets in response.
“We’ve seen some of the biggest and the oldest investment companies in the world create ETFs to hold and trade the assets in the US,” says Wilkes.
The ETF launch was followed by April's Bitcoin halving, an event that happens roughly every four years and is designed to restrict the supply of Bitcoin. This is capped regardless – a maximum of 21 million Bitcoin will ever be mined – but the halving cuts the reward bitcoin miners are paid in half, lowering the speed at which new Bitcoins come into circulation.
This engineered scarcity is another upward pressure on the Bitcoin price.
Will the US start buying bitcoin?
With these tailwinds having pushed Bitcoin prices to above $70,000 by March, the next major catalyst in Bitcoin’s approach to $100,000 was Donald Trump’s US election win.
The president-elect adopted a strongly pro-crypto posture during his election campaign, and since the result on 6 November Bitcoin has gained approximately 30% on optimism for the crypto-friendly policies his administration could adopt.
This could potentially include building a strategic Bitcoin reserve, which would see the US state start to buy the cryptocurrency. The chances of this happening increased recently following last week’s introduction of the Pennsylvania Bitcoin Strategic Reserve Act, which aims to allow the state of Pennsylvania to invest up to 10% of certain funds into Bitcoin.
However, Faisal Sheikh, managing director of Monmouth Capital, downplays the chances of this, arguing it would be against the US’ interests to support Bitcoin’s widespread adoption by central banks or as an international means of exchange.
“Trump holding a fistful of Bitcoin wouldn’t be of much use if the Dollar ceased to be the world’s reserve currency,” he says. “Is the US federal government really going to let that happen?”
