What’s Going on With Bitcoin?

After some months of quietude, digital currencies are back in the headlines—or at any rate Bitcoin is. In case you haven’t noticed, that’s because the leading cryptocurrency as of the third week of November was pushing toward $95,000—not only an all-time high but also, not so long ago, thought to be an inconceivable price. After all, the token started the year at $44,000, less than half its lofty value going into December, according to Coinmarketcap.

Bitcoin has been hitting “all-time highs” for most of 2024. And in some ways the current boom is far from unprecedented. In the fall of 2021, it climbed into the heady reaches of the low $60Ks after starting the year in the low $30Ks. Face it: Bitcoin, though a promising digital currency, is volatile, to say the least. Congratulations to the folks who bought the coin at some low point and are now reveling in the approach to $100K.

But it might be worth a look at the forces propelling the current boom, and also at what this all means for digital payments. Bitcoin, along with competing digital currencies—including stablecoins—were and are not now intended to be investments. Rather, they are meant to be that great white whale of digital commerce—an electronic currency offering convenience, value, and lightning-quick transactions.

But investments they certainly can be. A number of factors account for at least some of the current run-up (assuming no crash between the time of writing and when you read this). Donald Trump’s massive win in November, assuring him another term as President, has been a factor, as he promised on the hustings he would turn the U.S. into a “hub” for digital assets and build out a “national reserve” for Bitcoin.  Whatever all that might mean, Trump’s campaigning had as much to do with Bitcoin’s current boom as it did with propelling him into the White House.

While on the subject, Trump’s candidacy also raised speculation that he might replace Gary Gensler, the head of the Securities and Exchange Commission, who had been promising closer scrutiny of Bitcoin. No news on that front yet, but the new Administration has barely got started. Still, the speculation about bumping Gensler is thought to have added some rocket fuel to Bitcoin’s boom, as well.

Other factors include the entry of institutional investors in crypto trading and U.S. approval earlier this year of Bitcoin ETFs. Also, the Fed’s recent 25% rate cut may have pushed a few investors into the digital-currency pool, helping to drive up prices.

Left unanswered in all this: When can we routinely go about our shopping with digital currencies?

—John Stewart, Editor john@digitaltransactions.net