Explained: Why Bitcoin May Soon Cross $1,00,000 Mark After Trump's Return

Driven by anticipated pro-crypto policies under Donald Trump, who returns as US President on January 20, 2025, Bitcoin is fast approaching the $1,00,000 mark. This surge, after its low point in 2022, has sparked widespread interest and led to many asking what's behind the meteoric rise in the value of the first decentralised cryptocurrency.

Why Bitcoin is approaching $1,00,000

Bitcoin's price has seen a massive increase in recent months, with the cryptocurrency coming close to hitting the $ 1,00,000 mark. As of November 21, Bitcoin was trading between $98,000 and $99,000, briefly surpassing $99,000. This growth marks more than a doubling of Bitcoin's value in 2023.

A key factor behind the surge is the recent shift in US politics. With the election of Donald Trump as president, there's hope among investors that his administration will create a more crypto-friendly regulatory environment, according to Reuters. Trump's pro-cryptocurrency stance, which he promoted during his campaign, has boosted market sentiment. He also talked about building a national Bitcoin stockpile and promised to turn the US into the "crypto capital of the planet." These promises have led many to believe that regulatory obstacles for digital assets might ease under his leadership.

What role has the approval of Bitcoin ETFs played?

The approval of Bitcoin exchange-traded funds (ETFs) has played a major role in Bitcoin's price surge. Citing worries about investor protection, the US Securities and Exchange Commission (SEC) had long sought to ban these ETFs. However, the approval earlier this year opened the door for more institutional investors to gain exposure to Bitcoin. The ability to invest in Bitcoin through ETFs has made the cryptocurrency more accessible to a broader range of investors, further boosting demand.

Since the US presidential election, over $4 billion has flowed into US-listed Bitcoin ETFs, signalling strong investor interest. In addition, options trading on Bitcoin ETFs have seen increased activity, particularly in BlackRock's ETF, with investors betting on further price rises.

How does the political landscape influence Bitcoin's rise?

The political environment, particularly in the US, has had a substantial impact on Bitcoin's surge. Trump's victory and his support for cryptocurrency sent a strong signal to the market. The president-elect's launch of World Liberty Financial, a new crypto business, in September 2024 further underlined his commitment to the sector. His personal interest has been interpreted by investors as a positive sign.

Furthermore, Trump's connection to prominent figures in the crypto world, such as billionaire Elon Musk, has fueled optimism. The Tesla CEO, a well-known proponent of cryptocurrencies, has consistently advocated for their adoption, adding to the positive sentiment surrounding Bitcoin.

Is the rise sustainable?

Bitcoin's recent price surge is undoubtedly impressive, but the question remains - will the rise continue? Some analysts believe that once Bitcoin breaks through new highs, it could attract even more capital. "Once you break out to new highs, you attract a lot of new capital," John LaForge, head of real asset strategy at Wells Fargo Investment Institute, told Reuters. This "price discovery mode" could see Bitcoin pushing even higher, much like gold in the 1970s, which experienced dramatic price increases after breaking key thresholds.

Joe McCann, CEO of digital assets hedge fund Asymmetric, echoed similar sentiments, telling Reuters that "$100,000 is a foregone conclusion," suggesting that Bitcoin is likely to continue its upward trajectory.

Are there any concerns surrounding the Bitcoin boom?

Despite the growing excitement, there are some concerns. Two years ago, the cryptocurrency industry was hit hard by the collapse of the FTX exchange and the arrest of its founder, Sam Bankman-Fried. That event highlighted the risks involved.

Additionally, Bitcoin's environmental impact remains a controversial topic. Mining Bitcoin requires significant energy resources, leading to concerns about its contribution to carbon emissions and its potential strain on power grids. Critics argue the energy-intensive nature of mining operations could undermine the cryptocurrency's long-term viability.

Moreover, the crypto sector is still plagued by issues related to crime. In 2023, crypto researchers Chainalysis reported that over $24.2 billion worth of crypto was sent to illicit wallet addresses, including those linked to terrorist financing and scams. This concern has raised questions about the cryptocurrency's role in illegal activities.