There's no doubt that the cryptocurrency asset class has been one of the best-performing in recent times. Just take a look at Bitcoin (BTC 1.90%), whose price has absolutely skyrocketed over the past decade.
Even in 2023, the world's most valuable digital asset soared 154%, a gain that crushes the overall stock market. However, Bitcoin remains 38% off its all time high.
The bulls aren't deterred; they are encouraged by the momentum. They have their sights set on $100,000 per coin. Can Bitcoin rise 130% from today's levels to reach this major milestone?
A favorable setup
Bitcoin has been in the news a lot lately. That's because the digital asset achieved something that has long been overdue. And this is the approval of spot Bitcoin exchange-traded funds (ETFs).
Earlier this month, the Securities and Exchange Commission finally allowed these financial products to come to market. And perhaps Bitcoin's gain in 2023 was due to the anticipation from the investment community about ETFs being approved. Many are considering this a monumental event in Bitcoin's history, finally making this a legitimate financial asset in the eyes of the government and Wall Street.
Spot Bitcoin ETFs now make it cheap and incredibly easy to gain exposure to Bitcoin's price movements. Investors don't have to open a separate brokerage account with a cryptocurrency exchange or worry about self-custody issues anymore. Bitcoin bulls are hoping that the ETFs will introduce a new wave of capital to the asset, which could drive up the price over time.
Besides a regulatory stamp of approval, there's another event that should propel Bitcoin to a higher price. Set to happen this April, the blockchain network will undergo what's known as a halving. This is when the Bitcoin rewards that miners receive to approve transactions and secure the blockchain get cut in half. It happens roughly every four years, and it has historically created a bullish environment for Bitcoin.
Just look at the last time this happened. In May 2020, Bitcoin had its last halving event. The cryptocurrency soared in the two months before. And in the 18 months following the halving. Bitcoin skyrocketed 661% to eventually reach its all-time high of nearly 69,000 in November 2021.
Should something similar play out this time around, the digital asset could reach a new peak price 12 to 18 months following the upcoming halving. Maybe the $100,000 mark is the new achievement to be had.
CRYPTO: BTC
Key Data Points
Solving a problem
It's easy to get caught up in Bitcoin's short-term price action, but investors should take the time to understand what makes this cryptocurrency really special.
Bitcoin supporters have incredibly strong views about this digital asset because of the problem that it solves. By being a decentralized and global peer-to-beer payments network that isn't controlled by any central authority, Bitcoin is basically trying to disrupt the Federal Reserve and current monetary system. Some people argue that central bankers have caused more harm than good by constantly manipulating interest rates to solve inflationary and economic issues that they seem to not have any grasp over.
Plus, consider that the U.S. government currently has $34 trillion in debt, a figure that has surged over the past four decades. This doesn't even include underfunded liabilities like Social Security and Medicare. The thinking is that the government will have no choice but to continue printing money going forward, thus making the debt burden even more insurmountable.
This troubled monetary situation seems unsustainable. Bitcoin's properties, mainly the fact that it has a fixed supply cap of 21 million coins, coupled with it not being controlled by anybody, makes it an attractive asset to own in one's portfolio.
While near-term price movements are hard to predict, there is a chance that Bitcoin will reach $100,000 in a short period of time. However, investors should only buy this asset if they believe in its long-term potential, with the intention of holding it for the next decade. With that time horizon in mind, the price could eventually be much higher than $100,000.
