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Why is cryptocurrency rising and bitcoin at an all-time high?
Bitcoin was worth $45,000 USD at the beginning of 2024. But in Nov. 2024, it reached an all-time high of $90,000 USD. Keep reading to see what is driving cryptocurrency optimism.
Bitcoin is the most widely traded and well-known type of cryptocurrency.
Since it was first created back in 2009, the value of bitcoin has fluctuated, often wildly at times, as awareness and interest in the digital currency shifts.
Over the last decade, bitcoin's value has experienced significant volatility with large gains followed by precipitous declines. In 2017, bitcoin surged from around $1,000 in January to nearly $20,000 by December of that year. In 2018, bitcoin went the other way, with prices dropping below $4,000. 2020 was another wild swing, with value ranging from $7,000 to over $28,000 by the end of the year. The momentum continued into 2021, with bitcoin reaching a peak of $69,000 in November.
Then, in 2022, the value of bitcoin, along with other cryptocurrencies such as ethereum, dropped significantly during a period that is known as the crypto winter. At the time, bitcoin's price fell below $20,000 by the end of the year. However, 2023 marked a turnaround, with bitcoin closing the year at just over $42,000.
2024 has been a landmark year for Bitcoin, with several key events driving its price to new heights. In January, the U.S. Securities and Exchange Commission (SEC) gave regulatory approval for cryptocurrency exchange-traded funds, including spot bitcoin ETFs. By March, bitcoin was trading at around $70,000. There was also a bitcoin halving event in April 2024, which also increased interest and value.
Leading up to the U.S. presidential election, bitcoin's valuation was around $68,000 in Oct. 2024. After the election, bitcoin has been on a bull-run, reaching new highs almost daily. On Nov. 13, 2024, bitcoin hit a new all-time high of over $90,000, providing a lofty market capitalization of approximately $1.8 trillion USD.
Why is bitcoin going up?
The Nov. 2024 surge in bitcoin's value can be attributed to several factors, each playing a crucial role in driving the cryptocurrency to new heights.
However, the single biggest individual driver is the victory of President Trump in the U.S. general election on Nov. 4. Donald Trump's election victory has been a significant spark for bitcoin's price explosion.
During the election campaign, at a bitcoin conference in Nashville, Tenn., Trump pledged to make the U.S. "the crypto capital of the planet." At the same event, Trump promised that if he was elected, he would appoint a cryptocurrency-friendly chairperson to the SEC.
The idea under a Trump Administration is that there would be less regulation to limit cryptocurrency as well as more favorable policies put in place to support usage and adoption.
As part of ensuring more cryptocurrency friendly policies are in place, Trump has also proposed creating a bitcoin and cryptocurrency presidential advisory council. The council will include individuals that are in favor of cryptocurrency. Going a step further, Trump has also stated that he would not allow the U.S. Federal Reserve to create its own digital currency.
The pro-cryptocurrency stance and overall rhetoric coming from Trump has provided renewed confidence and exuberance to the price of bitcoin. The Trump win also led to an overall spike across U.S. stock markets in the days following the election.
Steady ETF inflows
The Trump win provided additional momentum for bitcoin, on top of a series of other factors.
In Jan. 2024, the SEC first allowed the creation of spot bitcoin ETFs. The Trump victory made those ETFs more popular with large inflows of new investor capital.
On Nov. 11 and 12, bitcoin ETFs recorded the largest volume of capital inflows, since the ETF were first allowed in January. Approximately $2 billion of capital flowed into bitcoin ETF on those two days alone.
The BlackRock iShares Bitcoin Trust is one of the biggest recipients of inflows with over $40 billion since the fund was created and is larger than any other ETF launched in the past decade.
Deregulation
It is expected that overall the tech industry will see less regulation under a Trump administration.
The process of deregulation could have a significant impact on cryptocurrency. Even the talk of deregulation has already played a part in the price gains for bitcoin in November. The prospect of deregulation under Trump's presidency has already driven bitcoin to record highs above $90,000, reflecting market optimism about a cryptocurrency-friendly regulatory environment
As part of his campaign platform, Trump signaled plans to reduce regulation surrounding the cryptocurrency industry. Less regulation could mean more opportunities for cryptocurrency because there will be fewer restrictions.
Trump's specific regulatory promises include the following:
- Firing SEC Chairman Gary Gensler, who has led cryptocurrency industry crackdowns.
- Creating a strategic bitcoin stockpile for the U.S.
- Making the U.S. "the crypto capital of the planet."
- Appointing cryptocurrency-friendly financial regulators.
Lower taxes
Another part of the Trump agenda that is helping to push bitcoin to all-time high price levels is the issue of taxes.
There are several elements of the Trump agenda that will lower taxes and make cryptocurrency investing even more attractive to investors. Some of the proposed tax changes and their potential impact on the cryptocurrency market include the following:
- Capital gains rate cut. Trump has proposed to lower the maximum capital gains tax rates. This reduction would allow investors to keep a larger portion of their profits from cryptocurrency trades.
- Tax-free transactions. The Trump proposals also have included discussion on eliminating capital gains taxes on made-in-America cryptocurrencies, specifically bitcoin and XRP. In comparison, ethereum, which is largely based outside of the U.S., would still be subject to taxation.
Increasing retail participation
When bitcoin started, it wasn't easy for the average retail investor to get involved. That's no longer the case. As more individuals become comfortable with digital assets, the user base for bitcoin and other cryptocurrencies continues to expand, driving up demand and prices.
There are now multiple ways for retail investors to participate in the cryptocurrency market:
- Cryptocurrency exchanges. Cryptocurrency exchanges such as Coinbase have enabled increasing numbers of retail investors.
- Cryptocurrency ETFs. Any retail investor can easily invest in bitcoin via a cryptocurrency ETF. However, this type of easy access to bitcoin was not possible before 2024.
Impact of other cryptocurrencies
Bitcoin isn't the only cryptocurrency to gain in value. Multiple other cryptocurrencies including Ethereum, Solana and even Dogecoin have all had big gains.
The following table shows some of the gains:
| Cryptocurrency | Price before Nov. 4 election (USD) | Price on Nov. 13, 2024 (USD) | Percentage change (before to Nov. 13) |
| bitcoin (BTC) | $67,811.51 | $90,584.17 | 33.58% |
| ethereum (ETH) | $2,397.03 | $3,192.60 | 33.19% |
| dogecoin (DOGE) | $0.1583 | $0.3995 | 152.37% |
| solana (SOL) | $157.75 | $215.18 | 36.41% |
The future of cryptocurrency
The outlook for cryptocurrency appears to be mostly optimistic, albeit with some uncertainties.
Trump's pro-cryptocurrency agenda, including plans to establish a national bitcoin reserve, support U.S.-based mining and prevent the development of a central bank digital currency, could boost the cryptocurrency market. His promise to make the U.S. the "crypto capital" of the world might attract global innovators and investors.
While the short-term market response has been positive, with bitcoin and other cryptocurrencies seeing significant gains, the long-term impact will depend on the actual implementation of these policies and broader economic factors. The implementation timeline for Trump's policies is uncertain.
While the U.S. is an important market, the global regulatory landscape for cryptocurrencies continues to evolve, which could impact the U.S. market regardless of domestic policies.
Sean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He has pulled Token Ring, configured NetWare and been known to compile his own Linux kernel. He consults with industry and media organizations on technology issues.
