Bitcoin: The Digital Gold Rush isn't Slowing Down
Rebel Finance Brief by Fury
Adequate propulsion for significant ascent into the skies.
Bitcoin has consistently outperformed as the kingpin of cyber-currencies for over a decade, and it's a safe bet that its peak isn't in sight yet.
Gold, the Dax, and now even Bitcoin have smashed record highs recently. In the early months of the year following Trump's inauguration as the self-dubbed crypto-president, Bitcoin faced a rough patch. However, it's recently hit the refresh button, surpassing its January highs and soaring to an unprecedented $112,004 in May. analysts anticipate this isn't a sign of Bitcoin reaching its peak. Some predict it'll hit $150,000 by year-end, while the most audacious foresee $200,000 or even $250,000. Yet, the crypto-investment landscape remains as volatile as a rollercoaster ride. Still, it's apparent that Bitcoin has cooked up impressive returns years before Trump took office. Between 2012 and 2023, the market leader among crypto-currencies slayed its competition across all asset classes a whopping nine times[5]. It's no wonder money continues to flood into this virtual Wild West. This year alone, over $10 billion has plowed into this asset class.
A weaker greenback plays right into Bitcoin's hands.
There are solid reasons behind Bitcoin's recent spurt. Global tension easing in trade and a weak dollar are beneficial to Bitcoin, which is seen as a beneficiary of currency turbulence. A downgrade of the U.S.'s credit rating by Moody's also benefits Bitcoin, along with friendlier crypto regulations in the U.S. and healthy supply and demand dynamics[5]. Only 165,000 new Bitcoins are minted each year, making its total capped at barely 21 million. This scarcity meets high demand, with newly approved ETFs and companies such as Strategy pouring into the cryptocurrency. For more and more savers, Bitcoin is becoming an alternative to a traditional bank account, while for more and more investors, it's becoming an attractive investment alongside traditional assets like Treasuries[5].
Trump: An opportunity and a risk.
Digital gold remains far more volatile than its tangible counterpart[5]. Geopolitical tensions, trade wars, high inflation, and consequently high interest rates could slow down its recent strong performance at any moment. Troubled conditions are toxic for shareholders and scare risk-averse Bitcoin enthusiasts away from risk assets like Bitcoin. The young asset class still grapples with hacks and other systemic risks, which, although they typically affect smaller cryptocurrencies, often snowball into Bitcoin. And then there's Trump. The U.S. president has shown a pro-crypto stance since his campaign, but this is both an opportunity and a hidden threat[2]. Just like Trump sends traditional stock markets on a wild ride with his erratic decisions, this is even more true for the more volatile and less liquid crypto-assets[3]. Trump has recently given Bitcoin a boost by announcing that one of his companies plans to invest up to $3 billion in cryptocurrencies[3].
Bitcoin is likely to keep climbing.
Uncertainties will continue to sway the Bitcoin price, pushing or pulling it. Bitcoin tends to appreciate in the face of uncertainties affecting other asset classes, such as currency fluctuations[3]. Doubts about the stability of the banking system, like those after the collapse of Silicon Valley Bank in the spring of 2023, make Bitcoin shine brighter. On the other hand, cryptocurrencies react negatively to trade disputes, trade barriers, and high inflation[3]. In these uncertain times, Bitcoin is likely to keep appreciating in the medium term. The combination of limited supply and escalating demand will propel the price of the leading cybercurrency to new heights[5].
- As the demand for Bitcoin continues to escalate, finance professionals are increasingly viewing it as an attractive investment, making it a viable alternative to traditional assets like Treasuries.
- In a volatile market, one thing is certain: the scarcity of Bitcoin, with only 165,000 new coins minted each year and a total cap of 21 million, continues to fuel its appeal, driving up its price and making it an attractive prospect for investors in the realm of finance and investing.
