With bitcoin hitting new highs, it’ll likely reach the US$100,000 milestone before 2024 is out
- Written by Andrew Urquhart, Professor of Finance & Financial Technology, ICMA Centre, Henley Business School, University of Reading
Cryptocurrencies are surging again. Bitcoin has just hit an all-time high of more than US$72,000 (£56,300), pushing past the level of circa US$69,000 where it turned back during its last bull phase in late 2021.
Other top cryptocurrencies like ethereum and solana have reached their highest prices in three years, on the back of a run that has been going since the autumn. The value of the whole cryptocurrency market has raced up to US$2.6 trillion, triple what it was worth at the beginning of 2023 and not far off its previous US$3 trillion peak.
Much of this run has occurred at a time when the US dollar has been strengthening against other currencies (though it has fallen in the past couple of weeks). This can often be a time when cryptocurrencies get weaker, so it shows how strong they have been lately.
Many other fiat currencies around the world have been losing value against the US dollar during this period, so bitcoin reached all-time highs[1] in many of them long before it finally took out its high in the US currency.
So what has contributed to this explosion in prices and where is the market going for the rest of 2024?
Bitcoin ETFs
A major driver for this appreciation in prices has been the US authorities’ approval[2] in January of an investment vehicle known as an exchange-traded fund or ETF for the general or “spot” bitcoin market. An ETF is an easy way for the average saver to get exposure to an asset, since they buy shares in the vehicle, usually through their financial advisor, rather than having to go to the trouble of buying the underlying asset.
A total of 11 bitcoin ETFs were approved in the US, and their daily trading volume has now exceeded US$10 billion[3] – driven by frontrunners Blackrock and Fidelity Investments[4]. This demonstrates the large interest from traditional market participants, and as the spot ETFs become more mature, their providers will offer more promotional material and education to get more customers onboard.
Bitcoin/US$ price
SEC crypto sceptic Gary Gensler.
dca picture alliance/Alamy[15]
While that uncertainty continues, ethereum could be boosted by the so-called Dencun upgrade[16] (also known as Duncan or EIP-4844). Ethereum has competition from other blockchains such as solana and avalanche due to its relatively slow transaction speed and high costs.
It already completed its first major step in a long-term plan to reduce costs and cope with many more users (known as scalability) when it transitioned in 2023 to a different system for verifying transactions known as proof of stake[17]. The Dencun upgrade, which goes live on March 13, will further improve scalability by making data storage more efficient on the network, while also lowering transaction fees.
Where next
Predicting cryptocurrency prices is not for the faint-hearted. The market is very volatile, and often exceeds expectations when it goes up or down. The behaviour of individuals determines market prices and, as Isaac Newton put it[18], you can “calculate the motions of heavenly bodies, but not the madness of the people”.
However, the majority of commentators[19] expect crypto prices to keep rising over the coming months. Election years tend[20] to be good for investments in general, while a second Trump administration[21] would probably create a more favourable[22] regulatory environment for crypto assets (as would a Rishi Sunak victory[23] in the UK, however unlikely that seems at present).
As bitcoin becomes more and more mainstream and integrated with traditional assets, it isn’t inconceivable that it could hit US$100,000 in 2024 – an extraordinary feat for a invention that was worth nothing as recently as 2009.
References^ all-time highs (twitter.com)^ US authorities’ approval (theconversation.com)^ exceeded US$10 billion (news.bitcoin.com)^ Blackrock and Fidelity Investments (twitter.com)^ Trading View (www.tradingview.com)^ just postponed (cointelegraph.com)^ experts think (www.reuters.com)^ One feature (www.investopedia.com)^ took place (theconversation.com)^ on April 19 (www.nicehash.com)^ coincided with (qz.com)^ One theory (www.cnbc.com)^ Gary Gensler believes (www.coindesk.com)^ it would mean (www.coindesk.com)^ dca picture alliance/Alamy (www.alamy.com)^ Dencun upgrade (www.coindesk.com)^ proof of stake (www.investopedia.com)^ Isaac Newton put it (www.amazon.com)^ majority of commentators (www.forbes.com)^ Election years tend (advisor.morganstanley.com)^ second Trump administration (www.politico.com)^ more favourable (www.cnbc.com)^ Rishi Sunak victory (www.coindesk.com)
