Bitcoin price hits record $90,000 high: Here’s how it got there
Bitcoin continues 12 months of steady growth, up nearly 400% since this time last year.
It's been 6 months since we could last say this, but it's finally happened again – Bitcoin has broken through to a new all-time-high price of AUD$89,569 (USD$67,276) on 21 October 2021.
Bitcoin is up nearly 15% in the last week, in part due to the news that the US Securities and Exchange Commission (SEC) approved the very first Bitcoin-related ETF.
This follows a string of events which have stirred the market and led to bullish sentiment among investors, driving the overall market cap of cryptocurrencies to a record high of $2.8 trillion. According to CoinMarketCap, Bitcoin has also eclipsed its previous records for 24-hour trading volume.
Let's take a look at how we got here.
Why the SEC approval is such big news
Financial institutions have been working for years to get a Bitcoin ETF approved for public trading in the US. The SEC was always quick to shoot down these proposals, citing security concerns and regulatory issues.
After months of hinting they were looking closely at Bitcoin, they finally allowed an ETF to trade Bitcoin futures contracts. ProShares' Bitcoin Strategy ETF started trading on Tuesday 19 October, and Bitcoin has been on a bull run ever since.
For starters, the SEC approval gives Bitcoin greater public exposure. Traditional investors who were sceptical about holding cryptocurrency now have the means to get involved in the market without needing to hold the underlying asset, which is a hurdle for some. As more and more ETFs are approved, the number of people invested in Bitcoin will likely grow.
Regulatory approval also shows that governments are finally willing to take Bitcoin and cryptocurrency seriously. SEC legislation is just one more step towards governments accepting Bitcoin as a legitimate asset and allowing its inclusion in more financial markets.
Bitcoin in retrospect: The journey to $90,000
The past 6 months in the cryptosphere have been fast-moving. Twitter integrated Bitcoin tipping, Facebook is about to release a stablecoin, NFTs have exploded, and all the while DeFi protocols and their associated platforms continue to chug along with the support of the die-hard crowd.
- April 2021: Bitcoin sets a new all-time-high price of $84,500 after 7 months of growth, which was fuelled by announcements such as Tesla purchasing USD$1.5 billion worth of Bitcoin for its treasury. After setting a new record high, prices soon come crashing back down in May to a low of $40,000 by July.
- May 2021: The NFT boom bridges the gap between cryptocurrency and the mainstream, bringing more attention to Bitcoin.
- June 2021: El Salvador passes a law to become the first country to approve wide-scale Bitcoin adoption, making it legal tender and using it for everyday payments.
- July 2021: Bitcoin reaches a local low of $40,000 despite major companies such as Facebook, Mastercard, Visa and Robinhood all rolling out cryptocurrency related ventures.
- August 2021: Bitcoin begins to rebound, while the NFT boom continues to lift other sections of the cryptocurrency market. Even Visa gets caught up in the hype and drops $200,000 on a CryptoPunk NFT.
- September 2021: China once again bans Bitcoin mining and trading, this time declaring all cryptocurrency transactions illegal – its harshest ban yet. Twitter, led by Bitcoin evangelist Jack Dorsey, announces Bitcoin tipping and NFT support.
- October 2021: US Federal Reserve chair Jerome Powell helps Bitcoin kickstart the month by saying they have no intentions to ban Bitcoin. Weeks later the SEC approves the first Bitcoin-related ETF in the US.
What's next for Bitcoin?
Many people are scared away from investing in Bitcoin due to its well-documented price swings. However, as the market expands, diversifies and becomes "more institutional, the amplitude of price swings will moderate", according to CEO of Pantera Capital, Dan Morehead.
Public confidence, in conjunction with greater accessibility to the coin, has left the vast majority of investors bullish. Finder founder Fred Schebesta believes that BTC will "cap the year at USD$87,000 due to the surrounding hype", while other experts have predicted the cryptocurrency possibly exceeding USD$100,000 within the next 6 months
Just 1 month ago, the Bitcoin industry's total market cap was about USD$1.7 trillion. Off the back of the SEC approval, this figure has soared to $2.6 trillion in a matter of weeks.
There are also interesting updates coming on the tech side of Bitcoin. Jack Dorsey, head of Twitter and American financial provider Square, is "investigating the technical requirements" for building an open-source Bitcoin mining system. This will assist in further decentralisation of the asset, which is associated with greater security.
Furthermore, Bitcoin is looking to implement an upgrade known as Lightning Network that is designed to resolve Bitcoin's slow transaction speeds and high fees.
The bottom line
Greater adoption by the public, and especially governments, around the world will likely be a key driver in Bitcoin's future growth.
Where it goes from here is anyone's guess and Bitcoin's surge over the past few days is not necessarily an indication of future gains.
What we can say, is that the next few months of Bitcoin are going to be interesting. At this point, it's pretty much "must-watch" television.
Disclosure: The author owns a range of cryptocurrencies at the time of writing