What’s next for Bitcoin after crossing the $100,000 milestone?

What’s next for Bitcoin after crossing the $100,000 milestone?

比特币突破10万美元大关后会发生什么？

Bitcoin's price has surged past the much-anticipated $100,000 mark, sparking discussions about its future potential and whether it can overcome its infamous volatility.The world’s leading cryptocurrency briefly hit $103,400 early Thursday, around 04:00 GMT, before experiencing a slight pullback.Dan Coatsworth, an investment analyst at AJ Bell, called this milestone a "magic moment" for Bitcoin and linked its rise to Donald Trump’s recent election victory.

Trump celebrated the achievement on social media, congratulating "Bitcoiners" and humorously adding, "You’re welcome!" His earlier promise to make the U.S. a "crypto capital" and a "Bitcoin superpower" has fueled optimism among cryptocurrency enthusiasts.

Bitcoin’s rally gained further momentum after Trump announced his intention to nominate Paul Atkins, a former SEC commissioner, to lead the Wall Street regulator. Atkins is widely regarded as more crypto-friendly compared to the current SEC chair, Gary Gensler.

Andrew O’Neill, a digital assets expert at S&P Global, remarked, "There’s a clear expectation that the new administration will adopt a more favorable stance toward crypto than its predecessor. This has driven Bitcoin’s recent gains and is likely to sustain the trend into the new year."

However, Bitcoin’s history is marked by sharp price swings. Some analysts warn that this volatility isn’t going away anytime soon.

"A lot of people have made fortunes from Bitcoin’s rise this year, but it remains a high-risk asset unsuitable for everyone," Coatsworth cautioned. "Its price is volatile, unpredictable, and driven by speculation—qualities that don’t lend themselves to stress-free investing."

The Trump Effect

During his presidential campaign, Donald Trump made a direct appeal to cryptocurrency investors by vowing to dismiss Gary Gensler, the chair of the Securities and Exchange Commission (SEC), on his first day in office.

Gensler’s tenure at the SEC has been notably tough on the cryptocurrency sector, a stark contrast to Trump’s crypto-friendly stance. In an interview with the BBC in September, Gensler described the industry as “rife with fraud, hucksters, and grifters.”

Under his leadership, the SEC pursued 46 crypto-related enforcement actions in 2023, a record number. However, Gensler announced in November that he would step down on January 20, the day of Trump’s inauguration.Trump’s selection of Paul Atkins to succeed Gensler at the SEC has been warmly received by cryptocurrency advocates. Atkins is known for his more favorable view of digital assets, raising hopes for a shift in regulatory policies.

Mike Novogratz, CEO of Galaxy Digital, a leading U.S. crypto firm, expressed optimism about the appointment. He noted that a "clearer regulatory path" under Atkins could accelerate the integration of digital currencies into the financial mainstream.

Bitcoin's Steady Rise in 2024

Bitcoin has experienced fewer dramatic price crashes in 2024 compared to previous years, marking a shift from its historically volatile behavior.

In 2022, Bitcoin’s price dropped below $16,000 after the bankruptcy of crypto exchange FTX, shaking investor confidence. However, several key developments, beyond Donald Trump’s election victory, have contributed to its recovery and growth this year.

Notably, the SEC approved several spot Bitcoin exchange-traded funds (ETFs), enabling major investment firms like BlackRock, Fidelity, and Grayscale to launch products tied to Bitcoin’s price. These ETFs have attracted billions of dollars in investments, boosting confidence in Bitcoin's future value.

Despite this optimism, Bitcoin’s inherent volatility remains a significant risk. Unlike traditional currencies, Bitcoin investors lack protections or avenues for recourse if they suffer losses.

Carol Alexander, a finance professor at Sussex University, highlighted that fear of missing out (FOMO), especially among younger investors, is driving Bitcoin’s price higher. However, she cautioned that this enthusiasm could lead to increased investment in other cryptocurrencies, some of which have left young investors losing money, particularly on speculative meme coins.

Kathleen Breitman, co-founder of the cryptocurrency Tezos, also urged caution. "These are markets driven by momentum, so you must approach them with great care," she warned, emphasizing the unpredictable nature of the crypto market.

My Analysis 

1. Institutional Adoption and ETFs:

The approval of Bitcoin exchange-traded funds (ETFs) has brought major institutional players like BlackRock and Fidelity into the market. This legitimizes Bitcoin as a financial asset and attracts significant capital inflows. If this trend continues, Bitcoin’s price could stabilize and grow further as it integrates more deeply into traditional financial systems.

2. Regulatory Environment:

Bitcoin's future will heavily depend on regulatory developments. The appointment of a pro-crypto SEC leader under Trump’s administration signals potential favorable policies, which could attract more institutional and retail investors. However, overregulation or policy shifts could still negatively impact its growth.

3. Volatility Risks:

Despite its rise, Bitcoin remains highly volatile and speculative. Past sharp declines remind investors of its unpredictable nature. Any negative events, such as a large exchange collapse or a sudden drop in demand, could trigger a significant price correction.

4. Mass Adoption and FOMO:

Growing interest from younger investors driven by fear of missing out (FOMO) could push prices higher. However, their focus on speculative coins could also bring instability to the market.

5. Market Dynamics and Competition:

As Bitcoin matures, competition from other cryptocurrencies like Ethereum and emerging blockchain technologies could affect its dominance. However, Bitcoin's first-mover advantage and position as a store of value make it resilient.

6. Macroeconomic Factors:

Bitcoin's price could be influenced by global economic trends, including inflation, currency fluctuations, and geopolitical tensions. Many investors view Bitcoin as a hedge against traditional financial risks, which may sustain its long-term demand.

Predictions:

Short-term: Bitcoin may experience further price increases, driven by institutional adoption, favorable regulatory changes, and continued media attention.Medium-term: Expect potential corrections as the market absorbs gains, especially if macroeconomic or regulatory challenges arise.

Long-term: Bitcoin’s price is likely to grow steadily, but its path will be shaped by its ability to address volatility, scalability, and competition, as well as its adoption as a global financial asset.Investors should remain cautious, diversifying their portfolios and staying informed about market trends and risks.