During the 2021 bull market, many crypto experts and retail traders predicted that Bitcoin would break the $100,000 mark. Even the well-known stock-to-flow model by the anonymous Dutch analyst PlanB pointed to a possible rise to $100,000 in 2021 or 2022. Although these predictions didn‘t materialize at the time, Bitcoin has now finally reached this long-anticipated milestone and is trading above $100,000! Below, we explore the key reasons behind this price surge.

The Bitcoin halving

One of the main drivers of Bitcoin's price increase is the Bitcoin halving, an event that occurs roughly every four years. During the halving, the reward for miners is reduced by half, meaning fewer new Bitcoins are introduced into circulation. This limited supply, combined with consistent demand, creates a scarcity effect that often drives prices higher. Historically, each halving has triggered a significant price rally as investors anticipate further value increases due to reduced supply. In this bull run, the recent halving has played a critical role in strengthening bullish market expectations.

Institutional adoption through US Bitcoin ETFs

One of the most significant developments in the Bitcoin ecosystem recently has been the approval of Bitcoin ETFs (Exchange-Traded Funds). A Bitcoin ETF allows investors to gain exposure to Bitcoin without needing to purchase or manage the digital asset directly. This provides a convenient entry point for institutional and retail investors through traditional investment markets. Major US providers of Bitcoin ETFs include BlackRock, Fidelity, Invesco & Galaxy, Franklin Templeton, VanEck, 21Shares & Ark Invest, Bitwise, WisdomTree, Valkyrie, Hashdex, and Grayscale. An increasing number of institutional investors, such as large corporations, pension funds, and hedge funds, have embraced Bitcoin and other cryptocurrencies as a valuable alternative to traditional investments. High-profile names like Tesla, MicroStrategy, and Grayscale have made significant Bitcoin purchases, boosting demand and positively impacting the price.

Trump as president

The election of Donald Trump as president has had positive effects on the crypto market, including Bitcoin. Trump is known for his plans to reform the US economy, focusing on economic changes and government efficiency. These shifts not only introduce uncertainty in traditional markets but also drive interest in alternative assets like Bitcoin. Furthermore, Trump‘s policies and regulatory easing have increased the appeal of digital currencies, especially among investors looking to protect their capital against inflation and economic instability.

Elon Musk joins D.O.G.E.

Elon Musk‘s involvement with the Department of Government Efficiency (D.O.G.E.) has drawn significant attention from both the tech and crypto worlds. Musk, a long-time advocate of Bitcoin and other cryptocurrencies, has sparked excitement with his participation in a major government initiative. This is seen as indirect support for digital currencies. Known for his association with Dogecoin, Musk‘s role in D.O.G.E. is interpreted by many as a signal of crypto‘s growing mainstream acceptance, possibly even by governments. While his influence has driven market movements before, his involvement in this bull run is once again making waves. Whether D.O.G.E.‘s name is a nod to Dogecoin remains unconfirmed.

Macroeconomic forces driving Bitcoin‘s growth

Bitcoin has gained popularity as a response to inflation, weak fiat currencies, and geopolitical uncertainties. Once the domain of crypto enthusiasts, it is now attracting institutional interest. With its capped supply of 21 million coins, Bitcoin is immune to inflation, making it an appealing alternative to traditional currencies and even gold. In an economic environment shaped by interest rate hikes and liquidity injections, Bitcoin offers a safe haven for those seeking stability and value.