Despite setbacks and slumps over its 15-year history, Bitcoin is now on the cusp of cracking the once-though mythical valuation of $100,000.
The world's premier cryptocurrency has had a stellar year, more than doubling in valuation since January 1. It is currently hovering at around $99,000 as of publication time, having briefly reaching $99,347 at around 3:00 a.m. ET.
"$100k means many of Bitcoin's fiercest critics have some crow to eat," Garrick Hileman, an economic historian and cryptocurrency researcher, told Newsweek. "Bitcoiners in 2021-22 who adopted the 'laser eyes until $100k' mantra were widely ridiculed at the time when the price collapsed the following year. We know who is laughing now."
The steady 2024 success of the cryptocurrency is owed largely to a decision by the Securities and Exchange Commission, which in March approved the use of U.S.-listed exchange traded funds (ETFs) to track Bitcoin.
But the most recent surge comes on the heels of President-elect Donald Trump's victory in the 2024 presidential election, and the belief that his incoming administration will usher in more crypto-friendly policies.
Since the first transaction in 2009, Bitcoin's rise has been nothing short of meteoric. According to the 2024 Crypto Wealth Report, the number of millionaires whose wealth comes from Bitcoin now stands at 85,400, a rise of 111 percent in the past 12 months.
But for all its recent success, Bitcoin's history is fraught with fluctuations in price, legal challenges to the cryptocurrency market, and cautionary tales about the risks of speculative investing in such an untraditional asset.
What is Bitcoin?
Bitcoin was created by Satoshi Nakamoto, the pseudonym given to the individual or individuals who in 2008 authored a white paper outlining their vision for "a purely peer-to-peer version of electronic cash."
This decentralized currency, Nakamoto wrote, would "allow online payments to be sent directly from one party to another without going through a financial institution."
Unlike traditional money controlled by governments, Bitcoin is managed by a network of computers all around the world. These computers follow the same rules, ensuring no single person or entity can control it.
Each transaction is recorded in a public database called the blockchain—grouped together (blocks) and linked in chronological order (the chain).
To ensure that the Bitcoin, like traditional currencies, does not suffer the effects of inflation, there is a finite supply of only 21 million. New Bitcoins are created through a process called mining, in which powerful computers are used to to solve complex math problems, which validate transactions and add them to the blockchain. Of the 21 million in existence, around 19 million have been mined.
Mined coins can be used to buy goods and services from those that accept them, be sent across borders, or be held as investment to sell off whenever Bitcoin undergoes one of its bull runs.
How has Bitcoin reached the $100K milestone?
The cryptocurrency hit its first major milestone in 2017, reaching nearly $20,000 before plummeting to nearly $3,000 by the end of 2018. Its crash, which some compared to the bursting of the dot-com bubble, came amid fears that the crypto market was plagued by fraud, and that these non-physical currency could be easily taken out by only one government directive.
While these concerns tempered growth for years, its next surge came in 2021, when Bitcoin soared to $60,000, driven by growing institutional interest and its increased adoption as a potential hedge against inflation.
This high was again short-lived, with Bitcoin shedding nearly half of its value by mid-2021, which Time attributed to China's legislative "crackdown" on Bitcoin mining, as well as Elon Musk announcing that his company, Tesla, would suspend vehicle purchases using the cryptocurrency.
While it returned to $69,000 by November 2021, the Federal Reserve began to raise interest rates to combat inflation, dissuading investors form the riskier assets such as Bitcoin and ushering in what the World Economic Forum referred to as a "crypto winter." Investors confidence was further rocked by the implosion of FTX, one of the world's largest cryptocurrency exchanges, in late 2022. Bitcoin finished the year at $16,548.
"In the future, 2022 may be regarded as a turning point for the world of virtual currencies, when they lost their luster and were cast out as a fringe product most people approach with skepticism and caution," NPR's David Gura wrote in December of that year. "Or it may simply be remembered as a stretch of excruciating growing pains for an industry still in its infancy."
This past year has proven to be Bitcoin's year of redemption, rising nearly 130 percent and now teetering on the edge of $100,000.
Where can Bitcoin go from here?
The SEC approving Bitcoin-related investment products, the Fed's first rate cut since the onset of COVID, and the recent post-election fervor are all to thank for the currency's 2024 rally.
"Bitcoin is not going to go to one-hundred thousand dollars. Full stop," Craig Wright, an Australian computer scientist who claimed to be one of the creators of Bitcoin, said in July 2020.
Although Wright described Bitcoin as a "Ponzi scam" for those placing their trust in the volatile asset, it has proven rewarding for those who stayed steadfast during downturns and resisted joining the panic-driven sell-offs at every sign of trouble.
"There are certainly reasons to believe Bitcoin can climb even higher from today's levels," Hileman said, "but a word of caution is in order during these price bubbles as we've often see newcomers wiped out as they jump-in too late into a big price run."
While it is still not widely used for payments, as most would "rather save and not spend their Bitcoin," he noted that using it as an investment to hedge against other currency fluctuations could give Bitcoin even greater appeal in the future.
"For now it still is too strongly correlated with tech equities to be thought of in same way as gold, which is considered by many to be ultimate safe haven asset," he said. "However, people are increasingly speculating that Bitcoin will ultimately supplant gold as we continue to digitize the economy."
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