Bitcoin is staging a rapid rise and has briefly recaptured $66,000,which has brought back discussion as to whether it could reach the $100,000 level by the end of this year. While that big a surge remains uncertain, there are several triggers that could give BTC the necessary momentum to achieve the $100k mark so much desired by the crypto community.
Those include, institutional adoption, broader economic conditions, spot ETFs, and the upcoming US presidential elections, including other geopolitical factors.
Institutional Adoption and ETFs
Over the past four years, Bitcoin has been actively added by financial institutions to its portfolios, largely thanks to Michael Saylor and the company he spearheads – MicroStrategy. In 2020, the company began regular Bitcoin purchases, betting its spare cash on this limited in supply digital asset.
Based on this example and inspired by the persistence with which MicroStrategy continues to acquire BTC, financial institutions began to gradually follow its example. In 2021, Tesla announced a $1.5 billion acquisition of Bitcoin and there was even a short period of time when it accepted BTC for its electric automobiles. Aside from those two, numerous hedge funds have been buying Bitcoin.
This helped BTC to reach two all-time highs in 2021 (the second one was roughly at the $69,000 mark) and bolstered its image as a legitimate asset. In 2021-2022, PayPal giant also adopted Bitcoin, allowing users to buy, store Bitcoin (and a few other cryptos) and then also send it to third-party wallets.
This year, institutional adoption took a big further step as the SEC approved the launch of exchange-traded funds (ETF) based on the Bitcoin spot price. Through these funds, Bitcoin became accessible to traditional investors as they bought shares of these ETFs backed with actual Bitcoin stored by them. Among the companies that launched these funds were BlackRock, Fidelity, Ark Invest, Bitwise, Grayscale. Grayscale was the very first fund that began offering Bitcoin to investors in the form of Bitcoin Trust shares (GBTC). This year, it just officially converted the trust into an ETF.
Another important factor that is likely to play out well for Bitcoin this year is the Fed Reserve and its dovish monetary policy it pivoted to. This September, at a FOMC meeting, the head of the US central bank Jerome Powell announced the first interest rate cut in the last four years. It constituted 50 basis points. Powell hinted that until the end of the year, the Fed is likely to slash down the rates two or maybe even three times more.
With the interest rate going down, Bitcoin is likely to show a rally, while the first rate cut already gave it momentum for a short-lived increase since with low rates investors and institutions have more free funds to invest in risk-on assets which most of them believe BTC to be.
President Elections and Geopolitical Uncertainty
Another important factor to take into account when considering Bitcoin’s chances of reaching $100,000 this year stands out – geopolitical uncertainty. The approaching US presidential election in November with two totally different candidates – Donald Trump and Kamala Harris – are likely to have a significant impact on the future BTC price. With both of them having made multiple crypto statements, promising to legalize digital assets, Trump’s layout for this has been more detailed and definitive unlike that made by Harris.
Besides, historically markets face increased volatility at the time when elections take place due to the high level of uncertainty. Depending on whether any crypto regulation is adopted by the winner and what sort of regulation it would be, the price of Bitcoin and with it that of the rest of the crypto may experience large swings. While favorable regulation is likely to fuel Bitcoin’s further growth, an increased scrutiny on crypto assets may prevent the cryptocurrency market from reaching $100,000.
Aside from the elections, there are on-going military conflicts between Russia and Ukraine and Israel and Palestine. Unless they reduce or finish soon, their continuation is likely to also have a heavy impact on the price of Bitcoin. While some investors consider BTC a risk-off asset and buy it to get a hedge against the falling markets, others still believe it to be a risk-on investment asset.
Recently, after Iran shelled Israel and Israel promised to respond, many investors began to sell bonds and Bitcoin to get into gold, which has played the role of safe haven for hundreds of years, long before BTC appeared. Bitcoin price began to fall in light of this.
Anyway, chances of Bitcoin reaching the much-anticipated $100,000 level remain high but at the same time very uncertain. While there are positive triggers, like institutional adoption, increased acceptance around the world fueling Bitcoin’s growth, there are geopolitical tensions and the uncertainty linked to the upcoming elections are on the other scale. It is important to continue monitoring the situation on the market and in the political area in order to make the correct investment decision.
