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Since its launch in 2009, bitcoin (BTC) has made headlines and attracted interest from tech enthusiasts and investors. The cryptocurrency has seen several meteoric rises, jumping from under $500 in 2013 to over $64,000 by 2021.
After a big drop from those highs, bitcoin fell below $17,000 in 2022. However, the crypto has rallied since then, even setting a new all-time intraday trading high above $69,000 on March 6, leaving many investors wondering if bitcoin will continue its meteoric rise and hit six figures.
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When Will Bitcoin Reach $100,000?
No one knows for sure whether bitcoin will rise or fall in value over the coming days, weeks, months or years. However, one way to guess future price changes is to consider BTC’s past price movements.
In January 2014, bitcoin was worth around $800. By January 2024, it was worth more than $42,000. This represents a price increase of more than 5,150% and an annualized return of more than 135% per year over the past decade.
If bitcoin experiences the same rate of appreciation in its average annual return, it will reach $98,700 in January 2025 and reach $100,000 in February of the same year.
Some experts believe bitcoin could increase in value even faster. Frank Holmes, executive chairman of data center builder and operator HIVE Digital Technologies, says: “We could potentially see its price double to 4x over the next 12 months.”
Matt Hougan, chief investment officer at Bitwise, also believes that bitcoin could see big price increases this year. He says: “We think bitcoin is in a multi-year bull market and will likely set new all-time highs this year.”
This is of course a simplification of bitcoin’s potential price movements. Cryptocurrency is incredibly volatile and that decade of 135% annualized returns saw several instances where bitcoin lost half of its value or more in a short period of time and did not return to previous highs for months or years.
Why might the price of Bitcoin go up?
There are a handful of developments that could cause a rise in bitcoin’s price.
Find Bitcoin ETFs
On January 10, the US Securities and Exchange Commission approved the first spot bitcoin ETFs.
The approval of those new ETFs allows providers to create ETFs that buy and hold bitcoin directly on behalf of investors. This allows investors to trade BTC at its current or spot price. Previously, ETFs could only trade bitcoin futures.
Futures contracts are complex derivatives suitable for trading only by experienced investors.
Many investors believe spot ETF approval could increase bitcoin’s accessibility as an investment and attract investors who don’t own bitcoin simply because of the complexity of buying crypto.
“Bitcoin’s price is determined by supply and demand. Currently we have a massive new source [of] question of launching bitcoin ETFs,” says Hougan.
The Bitcoin Halving
When it comes to BTC’s supply, there is another factor at play as well. Bitcoin is about to undergo another halving.
Bitcoin operates through a decentralized network of computers that work to validate transactions. Those computers are said to ‘mine’ bitcoin. When a block of transactions is validated by generating the correct cryptographic solution, the miner who solved it is rewarded with new bitcoin.
There is a limit of 21 million bitcoins that will ever be produced, and every so often the amount of bitcoin allocated for validating a block is halved. There is no set date for the next halving—it depends on how many blocks have been validated. But estimates place the next halving sometime in May 2024.
Halving will reduce the supply of new bitcoin entering the market, and halving events have historically increased trading volume and demand for bitcoin.
“In April, we will see the flow of new supply in the market reduced by approximately $7 billion per year. New sources of demand and a reduction in new supply is a very good setup,” says Hougan.
Layer-2 solutions
The final price catalyst behind bitcoin is currently Layer-2 solutions, which have given the bitcoin network more scalability and means of use.
Previously, the bitcoin network could only be used to mine and move bitcoins between wallets. It was a digital ledger for a single cryptocurrency. Now, however, it can be used in other ways, such as for smart contracts or decentralized applications.
These additional applications add more functionality to the bitcoin network, potentially increasing its overall value.
Could Bitcoin Crash Again?
Bitcoin has a history of extreme volatility. When it was launched, bitcoin was worth pennies, and it was worth only a handful of dollars for many years after that.
However, since then the coin has undergone significant price swings.
It fell from a peak of $60,000 in April 2021 to below $30,000 by July of the same year. Then bitcoin rebounded to an all-time high of $65,000 that November before reaching around $16,000 at the end of 2022.
Howard Hook, a CFP and CPA with Princeton, New Jersey-based EKS Associates, says a bitcoin crash can come for a few reasons. “One of the biggest risks that could cause Bitcoin to lose value or crash again is regulatory issues… Other issues could simply be that another coin comes along and replaces Bitcoin as the most common,” says Hook.
“The fine nature of any asset whose value is not based on something tangible can lose value just because a lot of people decide today is the day to sell.”
Holmes says, “I always remind investors that government policy is a precursor to change. That said, one major risk to the price of bitcoin is anti-crypto legislation.
Bitcoin’s Environmental Impact
Concerns about bitcoin’s environmental impact could also lead to further regulation or a move to other cryptocurrencies for many investors.
In 2022, bitcoin used 150 terawatt-hours of electricity each year – equivalent to the entire population of Argentina – and emitted 65 megatons of carbon dioxide each year.
Does Bitcoin Have Any Upside Yet?
Interest from government regulators and major players in the financial industry lends credence to the idea that crypto may be here to stay. On March 6, the price of one BTC broke through the $69,000 intraday trading level for the first time ever.
The cryptocurrency market is maturing. When Bitcoin launched in 2009, it was the first of a brand new asset class, known only to a few and accessible only to the relatively tech-savvy.
Fast forward to today, and there are thousands of cryptocurrencies on the market with market capitalizations in the tens or hundreds of billions. While other recently launched digital assets such as NFTs have come and gone, cryptocurrency has lasted over 15 years and despite some significant volatility, has grown massively in value.
Should You Invest in Bitcoin?
Given its historical returns, bitcoin could be an attractive investment. Recent developments, such as the creation and sale of spot bitcoin ETFs, mean that it is easier than ever for investors to add the cryptocurrency to their portfolio.
For some, the diversification and potential returns are worth the risk.
“Bitcoin, like gold, may be attractive for investors to consider [a strategy for] diversifying portfolio assets,” says Holmes.
“Bloomberg conducted a study last summer in which more than 600 investors were asked which assets they would prefer to own if the US were to hit the debt ceiling and meet its obligations. Bitcoin was the number three asset on the list, following gold and treasuries.
However, it is important to keep in mind that the risks to cryptocurrencies are significant. Although bitcoin has been around for over 15 years, it is still a young asset class. For this reason, it can be difficult to know whether bitcoin will still be popular and popular a decade from now, and if it is, what it will be worth.
Hook says everyday investors should stay away. “The asset itself is speculative in nature. While it is used as a digital currency, much if not all of the price of the coin is the speculative nature of what it could be,” says Hook.
However, Hougan says that crypto presents a good opportunity. “There is no reward without risk,” says Hougan. “In bitcoin, there’s usually a lot of both.”
Frequently Asked Questions (Frequently Asked Questions)
What other cryptocurrencies could gain value in 2024?
The cryptocurrency market is incredibly diverse, and today there are thousands of different cryptos to choose from. Bitcoin is by far the biggest. But other major players like ethereum (ETH), solana (SOL), and XRP (XRP) have seen significant price increases in recent years, and they could see even more gains in the future.
How does trading bitcoin differ from trading other securities?
Cryptocurrencies are very different from traditional securities such as stocks or ETFs. For example, stocks represent a share of ownership in a company and its physical assets. Cryptocurrency, on the other hand, is not physical. It only exists on the blockchain.
Another big difference between cryptocurrencies and many other investment classes is that you can only trade most securities while the market is open, usually between 9:30 AM and 4:00 PM Eastern Time on business days. Crypto markets are open 24/7.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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