Bitcoin hit a significant milestone this week, breaking through $100,000 for the first time and setting a new all-time high. For those who have been in the industry for some time, this feat seemed unimaginable in the early days. It was only two years ago that the entire industry was ailing in the wake of the collapse of foundational institutions, such as Genesis, FTX, BlockFi, Celsius, Three Arrows, Voyager, as well as the LUNA/UST digital assets. Bitcoin had fallen to under $15.5K at its lowest point, well below the previous cycle’s high, something it had never done before.
It was dark days for the bitcoin and crypto industry for a while. Heavy-handed dealings from securities regulators and harsh treatment from banking overseers were par for the course in the wake of the industry’s collapse, unfortunate but not surprising. Regulators often operate with a hindsight bias, focused on preventing the thing that just happened, rather than forward-looking, preventing the thing that might happen in the future.
But then the regional banking crisis happened, and we were all reminded of why Bitcoin was created in the first place – to store and transfer value without the need for a trusted intermediary, like a bank. While the use case for Bitcoin in jurisdictions without functioning banking systems or profligate central banks and governments is obvious, it had been 15 years since Americans were reminded of the fragility of fractional reserve banking. Against that backdrop, bitcoin rose tentatively, once again emerging from the ashes of the previous crash.
The recovery wasn’t even though. In the early summer following the regional banking crisis, the SEC sued two of the largest digital asset exchanges, Coinbase and Binance, casting a pall once again over the industry. While Binance had long played coy with regulators, seemingly operating everywhere yet avowing domicile and registration to nowhere, Coinbase had long tried to play by rules, but either found there were no rules to play by or that no one was willing to outline them.
BlackRock’s filing for a spot bitcoin ETF came shortly after the lawsuits by the SEC. While it would ultimately take a Grayscale court victory over the SEC at the end of August before ETFs could be given the go-ahead, BlackRock’s presence certainly buoyed the industry’s prospects. Much of the fall and early winter of 2023 was dedicated to the process of launching the ETFs and getting documents and procedures in order.
By the time the bitcoin ETFs launched on January 11th bitcoin was already up 2x off the November 2022 low. Strong initial demand for the ETFs would propel it to a new all-time high in early March, to just over $73K. But then bitcoin entered a lull period. Inflows into the ETFs flipped to outflows driven by the Grayscale Bitcoin Trust. Big sellers such as the US government, the German government, and Mt Gox played a tug of war with big buyers, MicroStrategy, and its army of corporates. But for much of the next 6 months, bitcoin was rangebound, bouncing between $55K and $75K.
That isn’t to say not much happened in the industry, a lot did. Trump embraced crypto, Congress voted to overturn SAB 121, Biden vetoed the overturn, and then ultimately dropped out of the Presidential race. Harris made some vague overtures to the industry, but no details ever came forth.
Then there was the election itself, which promised to be close based on polling numbers, but was anything but close in the end. Crypto may or may not have been the deciding factor for voters, but it was definitely a factor from the financial perspective. Crypto PACs ran roughshod over politicians that opposed the industry, winning race after race. After all the years of trying to comply when there were no rules to comply with, the industry entirely upended the game by simply replacing the players on the board.
What is the significance of $100,000 anyway? In some sense, it’s nothing, an arbitrarily large and round number. In another sense, it’s everything, the sum of all the education, lobbying, technical development, ecosystem building, legal battles, political wrangling, and everything else that has gone into this asset by the individuals and organizations supporting it. Even if all you did was tell some aunts and uncles about Bitcoin over Thanksgiving, you did your part.
To revisit the question first raised during the industry's 2017 peak: "Have we *earned* it?"
The answer is clear:
Yes. We have absolutely earned it.
