Will Bitcoin crack the 100,000 mark?

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The big question is: where were you when Bitcoin broke the 100,000 dollar mark? Bitcoin owners can still think of something creative, as the symbolic mark has not yet fallen. However, the milestone is getting ever closer: Quotations of over 99,000 dollars have already lit up on most crypto exchanges today.

The Bitcoin price is thus continuing on an unprecedented high, recently setting new record highs practically every day. Since the beginning of the year, prices have risen by more than 130%. Since the eve of the US presidential election alone, the world's most valuable cryptocurrency by far has risen massively from below 70,000 dollars to new all-time highs of almost 100,000 dollars – - a remarkable increase in value of over 40% in around two weeks. Within the space of a year, the price has risen by as much as 170%.

Trump election provides new tailwind

What is the reason for the new rally? The main driver of the latest Bitcoin hype is the election of Donald Trump as the next US president. Trump's campaign statements about wanting to make the United States the "crypto capital of the planet" have electrified the markets. During the election campaign, the Bitcoin price was already a reliable indicator of Trump's election chances: if Trump weakened in the polls, the price of the world's oldest cryptocurrency also fell – and vice versa.

In his stance on Bitcoin and cryptocurrencies in general, Trump has actually performed a veritable 180-degree turnaround. During his appearance at the 2024 Bitcoin Conference in Nashville in the summer, the Republican now presented himself as a passionate supporter of Bitcoin and promised to make the USA a "Bitcoin superpower" if he was re-elected. This contrasts with his earlier statements in which he described Bitcoin as a "scam" in 2019.

Fantasy of Bitcoin as a reserve currency electrifies the markets

"Bitcoin stands for freedom, independence and sovereignty. It is the only way to escape government coercion and control," Trump declared in July. And what's more: "If we don't embrace crypto and Bitcoin technology, China will, other countries will. They will dominate, and we can't let China dominate. If crypto is to define the future, I want it to be mined, minted and manufactured in the US," Trump formally outed himself as a new Bitcoin enthusiast.

Trump's proposal during the election campaign to establish a national Bitcoin reserve in particular has boosted the confidence of many investors. For investors, Trump's crypto-friendly stance signals a regulatory future that offers fewer hurdles and more opportunities for digital assets. The result: massive capital inflows into Bitcoin and other crypto-based financial products.

Institutional acceptance: Bitcoin ETF with immense inflows

The increasing integration of Bitcoin into the traditional financial sector already provided enormous impetus at the start of the year. In January, the US Securities and Exchange Commission (SEC) approved exchange-traded funds (ETFs) from eleven investment banks for the first time, which invest directly in Bitcoin and Ether and thus triggered a run.

BlackRock, the world's largest asset manager, kicked things off in mid-January with the iShares Bitcoin Trust (IBIT). The ETF, which is traded on the Nasdaq, has subsequently seen huge inflows of more than 30 billion dollars and now already has 40 billion dollars in assets under management. This means that the Blackrock Bitcoin ETF has even overtaken the gold ETF as the index fund with the largest volume.

What's more, this week also saw the launch of options trading for BlackRock's iShares Bitcoin Trust ETF (IBIT) on the technology exchange, which generated billions of dollars in turnover on the very first day of trading.

Optimistic market sentiment boosts miner shares

The rapidly growing acceptance and legitimacy of Bitcoin in the institutional environment have triggered a veritable mania among retail investors. Technology companies that have invested heavily in Bitcoin, such as Microstrategy, or that operate as Bitcoin miners, such as Marathon Digital Holdings, Riot Platforms, CleanSpark, BitFarms or Iris Energy, are also benefiting from this. The trading platforms Coinbase and Robinhood have also recently recorded strong price gains.

The share price of Microstrategy alone, which was originally known for business intelligence software, has more than doubled since the election of Donald Trump – Since the beginning of the year, the short gains have even amounted to an astronomical 500%.

Microstrategy's surge thanks to Bitcoin represents one of the most remarkable comebacks in the history of the technology industry. The software pioneer founded by Michael Saylor in 1989 reached its peak to date at the height of the internet bubble in the early 2000s with a valuation of over 30 billion dollars and subsequently experienced a total crash of 99 percent on the stock market. Only a few weeks ago, the 24-year-old highs were surpassed and the market value even temporarily rose to over 100 billion dollars before profit-taking set in yesterday.

In view of Bitcoin holdings amounting to 30 billion dollars, but a very straightforward business model with software sales of just half a billion dollars a year, Microstrategy's recent drastic increase in valuation as a result of the Bitcoin surge raises questions.

Bubble or price target of 200,000 by the end of next year?

Is the investment in Bitcoin a bubble that, in the worst case, resembles historical hype along the lines of the tulip mania in the 17th century? Back then, tulips triggered the first speculative bubble. Or is the recent surge fundamentally underpinned by a combination of political tailwinds from the Trump administration and growing institutional acceptance?

"As we are just coming out of one of these long consolidation phases and the price is currently at a new high, something tells me that the hunt has begun," Rob Ginsberg, analyst at Wolfe Research, told CNBC, anticipating further momentum for Bitcoin. Meanwhile, analyst Gautam Chhugani from asset manager Bernstein even sees potential up to a price level of 200,000 dollars by the end of next year.

In the present, however, there are other hurdles to overcome. "The real test will come when the important psychological mark of 100,000 is reached," believes Ginsberg. This is exactly what is now imminent – and with it a new chapter in the never-ending Bitcoin saga.

(mack)