For the first time, bitcoin is attacking the historic level of $100,000 per unit, a level that, not so many years ago, would have seemed like a utopia for 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 contributed to increasing the attractiveness of the digital currency in the market. The inflow of capital into these ETFs, together with the revaluation that bitcoin has accumulated in recent months, have skyrocketed the assets of these vehicles to exceed $100 billion for the first time. There are analysts who believe that the cryptocurrency will continue to have the support of the markets in the coming months, and even more so after several firms have made public their commitment to continue acquiring a gigantic amount of bitcoins in the medium term.
So far this year, the price of bitcoin has risen more than 121%. The cryptocurrency began the year at around $44,000, and is now attacking, for the first time in history, the psychological level of $100,000 per Bitcoin. The latest increases have occurred thanks to Donald Trump’s victory in the US elections, due to the favorable electoral program towards crypto assets that the Republican candidate has presented.
Furthermore, 2024 has been the year in which the first exchange-traded funds (ETFs) that invest in bitcoin and other cryptocurrencies have been launched, a milestone for the investment industry that has managed to raise notable assets in its first months of life: From January until now, the capital in the hands of these funds has grown to exceed $100 billion among all vehicles this Thursday, the first time in history in which this level has been surpassed.
Mireya Fernández, head of Bitpanda for Southern Europe, highlights how “the positive developments of recent years, such as the increase in the adoption of digital assets by retail investors, the regulation of the crypto market in Europe, the cuts in central bank interest rates and the integration of cryptocurrencies into traditional financial systems and bank portfolios are beginning to demonstrate their full potential,” he points out. The cryptocurrency expert explains how “The market is hungry and prices continue to show an upward trend. The fact that bitcoin reaches $100,000 does not simply represent a number, but a real turning point for the crypto sector.”
For Manuel Villegas, digital asset analyst at Julius Baer, ”the animal momentum of the bitcoin markets has proven to be persistent. Prices are being supported by fundamentals,” he considers. “Aside from a better regulatory and legislative environment for bitcoin, investor euphoria has been driven by Trump’s latest appointments, and the announcement of a new Department of Government Efficiency,” 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 there are firms that try to do calculations to try to anticipate and see what may happen to future prices. The volatility of the currency is enormous, and as an investment asset it represents a significant risk for portfolios. We must not forget that, on the three previous occasions in which bitcoin has experienced a dizzying rally, the rises ended with a subsequent collapse from which, however, it has always recovered.
Villegas, however, now highlights a fact that can support bitcoin in the coming years: the demand for the cryptocurrency that the large firms most related to it have publicly committed. “In the last month, a few high-profile crypto companies have announced their intentions to raise capital through debt issues, and plans suggest an injection of about $43 billion in the coming years,” explains Villegas.
This figure can be put in relation to the amount of new bitcoin that can enter the market in the coming years through the mining process, and in this case, everything indicates that these companies are going to be an anchor for the price of the cryptocurrency for a couple of years, as long as the price of bitcoin does not go through the roof. “The inflation rate of bitcoin is close to 1.1% per year, or, which is the same, about 210,000 coins. At current prices, this rate is about 20 billion dollars per year,” explains Villegas, and confirms how “These intentions of the companies technically mean that, at constant prices, they will be purchasing all the new units of bitcoin that are issued in the next two years“, they explain.
This, together with the demand that may come from other types of investors, whether individuals through ETFs or other platforms, or new firms that begin investing in the coming years, seems to ensure a solid demand base for the currency in the medium term.
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