Bitcoin: Rising with Tailwind – A Retrospective on Rapid Climbs

Bitcoin, the leading cryptocurrency, is on the rise again, approaching its previous all-time high of $73,780.07, which it reached in March 2024. The question remains: Is a new rally beginning here, or is this merely a short-lived surge that came to an abrupt end due to yesterday's downturn? Long-time Bitcoin traders are familiar with the drastic price changes of the cryptocurrency. This recent rally is not a new phenomenon and is far from the most spectacular. In its early days, Bitcoin's price rose from around $0.30 at the end of 2010 to nearly $30 by June 2011. In 2012, trading began at approximately $13 and reached $1,000 by November. The recent upswing from late 2023 to early 2024 was impressive and stood out markedly from the weak performance in 2022. Within a few months, Bitcoin climbed from $25,000 to nearly $74,000. Several factors played a role in this development, with some key catalysts igniting this latest rally. The approval of Bitcoin Spot ETFs by the Securities and Exchange Commission significantly eased market access for both institutional and private investors. A prominent example is Blackrock's iShares Bitcoin ETF, which surpassed $10 billion in assets under management in just seven weeks after its market debut—a record that SPDR's Gold Trust reached in two years. Furthermore, April saw the occurrence of the so-called "halving," an algorithmic feature of Bitcoin that reduces the influx of new Bitcoins into the market over time. This halving of mining rewards occurs every four years and is expected to continue until the year 2140, when no new Bitcoins can be mined. Each of these "halvings" has so far been associated with a significant increase in Bitcoin's price. The recent surge is undoubtedly still associated with these two factors, but there are additional drivers. There is generally a more positive sentiment regarding the broader economy. Many believe that the Federal Reserve is achieving a soft landing by curbing inflation without stifling economic growth, thereby dispelling recession fears. The Fed's interest rate reduction policy is expected to continue, and regardless of the outcome of the U.S. presidential elections in November, more crypto-friendly regulation is anticipated.