For the first time, bitcoin is tackling the all-time high of $100,000 per unit, a level that not long ago would have seemed like a utopia to many analysts and investors. The first cryptocurrency is receiving support from the new US administration, and the approval of the first exchange-traded funds (ETFs) this year has helped increase the digital currency’s attractiveness in the market. The influx of capital into these ETFs, as well as the revaluation that bitcoin has accumulated in recent months, have caused the assets of these vehicles to skyrocket to exceed $100 billion for the first time. Some analysts believe that the cryptocurrency will continue to benefit from market support in the coming months, and even more so after several companies made public their commitment to continue acquiring a gigantic amount of bitcoins in the medium term.
Since the start of the year, the price of Bitcoin has increased by more than 121%. The cryptocurrency started the year around $44,000, and is now attacking, for the first time in history, the psychological level of $100,000 per Bitcoin. The latest increases took place thanks to Donald Trump’s victory in the US elections, thanks to the pro-crypto asset election platform presented by the Republican candidate.
Additionally, 2024 was the year of the launch of the first exchange-traded funds (ETFs) that invest in bitcoin and other cryptocurrencies, a milestone for the investment industry that has successfully raised assets notable during its first months of existence: Since January, the capital held by these funds exceeded $100 billion on Thursday for all vehicles combined, the first time in history that this level has been exceeded.
Mireya Fernández, Head of Bitpanda for Southern Europe, highlights how “the positive developments of recent years, such as the increased adoption of digital assets by retail investors, the regulation of the securities market cryptography in Europe, the reductions in interest rates of central banks “and the integration of cryptocurrencies into traditional financial systems and bank wallets are beginning to demonstrate their full potential”, he underlines. The expert in cryptocurrency explains how “The market is hungry and prices continue to trend upward. Bitcoin hitting $100,000 represents not just a number, but a real turning point for the crypto industry.”
For Manuel Villegas, digital assets analyst at Julius Baer, ”the animal dynamics of bitcoin markets have proven to be persistent. Prices are supported by fundamentals,” he believes. “In addition to a better regulatory and legislative environment for Bitcoin, investor euphoria has been fueled by Trump’s latest appointments and the announcement of a new Department of Government Effectiveness”, an office whose acronym in English “DOGE”, one of the best known. crypto assets in this market. “The prices are well justified by the demand for spot bitcoin,” he confirms.
Business demand will cover bitcoin for 2 years
In the cryptocurrency market, it is sometimes difficult to find specific fundamental factors that support the rise or fall of the currency, but some companies attempt to do calculations to try to anticipate and see what might happen to future prices . The volatility of the currency is enormous and, as an investment asset, it poses a significant risk to portfolios. It should be remembered that on the three previous occasions when Bitcoin experienced a dizzying rally, the rises ended in a subsequent collapse from which it nevertheless always recovered.
Villegas, however, now highlights a fact that can support bitcoin in the years to come: the demand for the cryptocurrency that the large companies most linked to it have publicly committed to. “Last month, a few leading crypto companies announced plans to raise capital through debt offerings, and plans suggest an injection of around $43 billion in the coming years,” explains Villegas.
This figure can be related to the amount of new bitcoins that can enter the market in the coming years thanks to the mining process, and in this case everything indicates that these companies are going to be an anchor for the price cryptocurrency for a few years, as long as the price of Bitcoin does not skyrocket. “The inflation rate of bitcoin is close to 1.1% per year, or, which amounts to the same thing, around 210,000 coins. At current prices, this rate is around $20 billion per year” , explains Villegas, and confirms how “These intentions of the companies technically mean that at constant prices, they will buy all new units of bitcoin issued over the next two years.“, they explain.
This, combined with the demand that may come from other types of investors, whether individuals through ETFs or other platforms, or new companies that will begin investing in the coming years, appears to guarantee a solid demand base for the currency in the medium term.
