This year, Bitcoin experienced a remarkable year, recently hitting over $107,000, driven by a confluence of market dynamics, regulatory developments, and political optimism. The approval of multiple spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) in January marked a pivotal moment, catalyzing significant institutional investment and mainstream adoption. This regulatory nod was complemented by the anticipation of further legislative clarity with the introduction of the BITCOIN Act of 2024 by Senator Cynthia Lummis, aiming to affirm Bitcoin’s status and encourage its use.

Regulation Rigmarole

Regulatory news wasn’t uniform across the board; while the U.S. saw progressive steps, regions like China maintained stringent controls, though there were hints of softening stances. Globally, the regulatory landscape was a mosaic, with Europe advancing with the MiCA framework, offering a clearer path for crypto assets, including Bitcoin, within its borders.

A Wild Ride

Bitcoin’s halving in April, reducing miner rewards, contributed to a supply squeeze, historically pushing prices up. This event, combined with economic policies like anticipated rate cuts, kept Bitcoin on an upward trajectory. Of course, the market was not without its volatility, with prices fluctuating based on macroeconomic news, geopolitical tensions, and the U.S. election outcomes, reflecting Bitcoin’s integration into the broader financial ecosystem.

Presidential Bump

Most recently, the election of Donald Trump sparked more than a 40% rally as bitcoin broke  above its March 2024 all-time-high of roughly $72,000. Trump has been vocal about his pro-crypto stance and his cabinet members are overwhelmingly supportive of crypto-currency, bitcoin, or both. David Sacks, former COO of Paypal, has been appointed White House A.I. & Crypto Czar. “He will work on a legal framework so the Crypto industry has the clarity it has been asking for, and can thrive in the U.S.,” Trump said. Trump also tapped Paul Atkins as SEC Commissioner who is a crypto-currency advocate, in contrast to the ongoing commissioner, Gary Gensler, who has been leading government crackdowns in the crypto industry. Trump has even floated the idea for a bitcoin ‘strategic reserve,’ similar to the country’s oil strategic reserve. “We’re gonna do something great with crypto because we don’t want China or anybody else – not just China but others are embracing it – and we want to be the head,” Trump told CNBC recently. 

Overall, what can we say about Bitcoin and cryptocurrencies??? Investing typically centers around trying to assess the true value of an asset based on a whole host of measures. Here, what should be the true price of bitcoin? It’s truly anyone’s guess. We owned a bitcoin ETF in some client portfolios this year, and fortunately, the trade worked. But at the end of the day, this area of the market can be summarized under the ‘greater fool theory.’ It’s only worth what the next investor will pay for it. Tread carefully when it comes to bitcoin and cryptocurrencies!

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