The Bitcoin bull market is in full swing and the digital asset has nearly hit $100,000 (it just broke $97,500 for the first time). Bitcoin was already having high hopes in 2024, but the election results putting Donald Trump back in the White House with a Republican Congress and multiple additional key developments have all helped juice the value of bitcoin up, up and away.
Oggonomics is not going to pretend that markets only go in one direction. And it would be foolish to believe that prices can rise indefinitely. Please refer back to the date of March 24, 2000 on the NASDAQ if you believe markets cannot face serious gains followed by serious losses. That said, the $100,000 price keeps looking like more and more of a reality and it’s a lot closer than the $3,000 gold calls look at this time.
And without making any price predictions, it sure seems plausible to expect at least some profit taking if Bitcoin does hit that $100,000 threshold? Again, that’s not a prediction — but it still seems logical for such a serious milestone to be hit, even if many Bitcoin bulls keep issuing much higher expected price targets.
PRE-WARNING NUMBER-1
Bitcoin is not a traditional asset class like stocks, bonds, cash and the like. Is bitcoin (and the rest of crypto) an alternative asset class? You bet your assets it is!
Don’t forget that there are no guarantees in the financial markets. The “Pro” of each and every one of these issues should have a serious “con” as an alter-ego. These drivers are not in any particular order. In fact, just consider them to be randomly selected.
There are no assurances that any of these will make tomorrow a better day than yesterday. And don’t forget about the rule of investing in anything speculative – you can lose your ass(ets)!
10 DRIVERS RIGHT NOW
There is no way that pointing out 10 drivers is all there is. There are more drivers, and each one of these “pro” drivers also come with “cons” that can come into play. That said, here are 10 drivers forcing bitcoin right now (and in no particular order at all).
1) ETF Demand – The iShares Bitcoin Trust ETF (NYSEArca: IBIT) now has $44 billion in assets as of the prior day’s close and the graph shows that $10,000 invested at inception (earlier this year) has just hit $20,000 for the first time ever. The interest in other bitcoin and crypto ETFs remains strong and some firms still have pretty strong restrictions or limitations on what customers can and cannot buy for their investment accounts. More bitcoin and crypto ETFs should be expected ahead if the prices remain firm.
2) Donald Trump as President – Trump was the binary winner for Bitcoin because Kamala Harris was only pro-crypto when it seemed as though it may have helped in the polls. Trump has been pro-crypto all year and has even talked about a Bitcoin or Crypto Reserve (similar to the Strategic Petroleum Reserve). Trump also wants the U.S. to be the international leader and destination for crypto miners and related companies. To date, the U.S. has not spent real dollars to buy crypt even if it has owned some via confiscation and forfeiture.
3) Trump’s nomination of Howard Lutnick as Secretary of Commerce – The head of Cantor Fitzgerald has been viewed as pro-crypto and pro-business. The same cannot be said about the current Administration, and that’s enough said there.
4) MicroStrategy – MicroStrategy, Inc. (NASDAQ: MSTR) keeps raising new cash in stock and debt as Michael Saylor keeps buying Bitcoin. This $100+ billion valued company has raised cash since but even at October 30, 2024 it held 252,220 for an acquired cost of $9.9 billion or $39,266 per Bitcoin. Its last acquisition at that time was 25,889 bitcoin in the third quarter (~$1.6 billion, at $60,839/coin on average). Again, it is buying at higher prices too. And while MicroStrategy is the largest of its kind of player by far, there are many other companies that are and want to keep buying bitcoin.
5) Gary Gensler will be out at the SEC — As of this time, a replacement as head of the Securities & Exchange Commission has not been announced nor confirmed. Whoever it is will be a more investor-friendly and crypto-friendly than Gary Gensler. It is no secret at all that Gensler is deemed anti-crypto, to the point that many were surprised any ETF was even able to get launched at all under his reign. Gensler will be replaced and if the choices were down to Gensler and “anyone else” the choice wouldn’t be Gensler.
6) The real 21M supply of Bitcoin isn’t true – The way Bitcoin was designed and programmed was to cap at 21 million coins. While there have been more than 19 million coins mined and there are somewhere close to 1.5 million remaining to be mined, no one has an accurate count of how many bitcoin have been lost forever. Passwords to hard drives and damaged drives have killed many bitcoin. People have passed away with no known passwords (or location) of where their coins went. Some coins were even forgotten about from when this was a tiny value. And some exchanges have died with “whereabouts unknown” as the status. Some estimates are as high as 6 million missing bitcoin, and some are closer to 4 million which are unaccounted for.
7) The Cost of Mining – Being a crypto and bitcoin miner is not cheap. You can’t just buy a pick and axe and start plowing into a mountain. It takes massive amounts of electricity to mine bitcoin. Costs to mine depend upon each miner’s power source — perhaps you noticed that AI and crypto teams have partnered with nuclear and renewable energy providers to cap mining costs? Whether this is $20K per coin or $50K per coin doesn’t really matter because very few teams even have the talent and knowledge of how to mine it. Let’s just say that as Bitcoin’s price rises, the competition for available energy excess capacity rises. In some ways, this is like gold miners’ all-in sustaining costs (AISC).
8) That Damned “Halving” – Each time the term “Halving” is popular in search it means that the reward for mining drops in half. The “halving” is built into the Bitcoin blockchain to reduce the reward for mining and it takes place approximately every four years for an effort to keep scarcity (supply) in shortage. If prices and demand for bitcoin rise, that makes each halving event that much more important. The block reward went from 6.25 BTC to 3.125 BTC in April of 2024, and around Q2-2028 that reward is expected to drop to 1.5625 and then in 2032 down to 0.78125 BTC. The last coin(s) are expected to be mined in 2040 (or so) and the block reward at that time will be down to just 0.1953+ BTC.
9) Retail & Institutional Demand – Despite the notion that Bitcoin has surged, and despite all the calls to have exposure to Bitcoin over the last 6 to 10 years, both individual demand and institutional demand have not come anywhere close to equilibrium with the total supply. Even if there are a fully diluted future 17 million coins (after losses) and even at $100K that leaves the entire bitcoin market cap at $1,700,000,000,000. That is less than some of the mega-cap stocks by half. The U.S. debt to the penny deficit is right at $36 trillion total. The value of all the world’s gold has been over $10 trillion for some time.
10) Just a 1% Allocation – There was an old rule of thumb for those investors who didn’t believe in crypto before. Allocating just 1% of your risk assets would not hurt you over time if Bitcoin falls to zero or suddenly disappears. By investing 99% of your assets in stocks and other risk-assets, your entire nest egg can keep growing over time if history remains the case where major stock indexes always grow over time. Having a 1% allocation means the maximum loss that can ever be seen is 1% against the entire value of a portfolio. With this in mind, even if you haven’t created any allocation at all to date, there is still time if the predictions of Michael Saylor, Cathie Wood and other great bitcoin bulls prove to be right. And if they are wrong, your other assets can still grow even if it’s just 99% of them growing.
COVER YOUR ASS(ETS)!
Again, there were not presented in any order and there are many other issues to consider which were not stated. These “drivers” absolutely do not come with any guarantees at all and every single “pro” comes with serious caveats and “cons” to consider.
It should be expected that if Bitcoin reaches $100,000 or any other major milestone that someone “and/or someones” will want to take profits on at least some of their assets. If you have over-committed to Bitcoin or other crypto (outside of “congrats for now!”) that choice was and is yours and yours alone.
Oggonomics does not issue any “ratings” such as Buy, Sell, Neutral and it does not issue any formal price targets. This is in no way meant to be investment advice nor is it a recommendation to buy or sell bitcoin or any other related assets mentioned or not mentioned. Investing is risky, particularly in alternative asset classes, and can result in the loss of your entire investment. Any decision to buy or sell equities or alternative asset classes should be made along with a financial advisor.
