Bitcoin has had a good year in 2024, with its near $100,000 milestone coming half a year after its latest halving. In this article, we take a look at the event and its future trajectory in December and beyond.

1. Bitcoin's recent performance has bulls excited, peaking at $99,000 in November 2024.
2. In 2017, Bitcoin’s near $20,000 high was seen by many as an overvaluation of the world’s only true blockchain-based digital asset, but marked another high in 2021 registering past $60,000.

The journey to $100,000

A decentralised digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer Bitcoin network without the need for intermediaries.

This has been said before of many cryptocurrencies. But it is true and provable only for Bitcoin.

While other major assets like Ethereum have fought to lay claim to the same, Bitcoin remains the only network that has never known the identity of its founders. Unlike Ethereum and other networks, Bitcoin’s development is unfettered by large and bureaucratic structures – and left largely to the unknown variables of volunteer developers picking up and implementing upgrade proposals suggested by the public.

It may have started in 2009 as a niche interest among cryptography enthusiasts but 15 years later, Bitcoin is a mainstream financial asset seen by many as digital gold, given its fixed supply and proven role as a store of value.

This period has overseen significant price fluctuations, from its early days when it was worth just a few cents to its first major spike in 2017 when it reached nearly $20,000. The rollercoaster has never stopped for Bitcoin – it continues to race towards new highs before shuddering to massive slumps – before 2024’s $99,000 peak, it was trading as low as $20,000 in March 2023.

It’s difficult to pin down what brought this year’s bull run. Some believe that institutional adoption has played a significant role, with major financial institutions like JPMorgan and Goldman Sachs not only acknowledging Bitcoin but also offering Bitcoin-related products to their clients. Additionally, macro-economic factors such as inflation concerns and geopolitical tensions have driven investors to seek refuge in Bitcoin. The increased interest from retail investors, fueled by social media and celebrity endorsements, has also contributed to the surge. The recent approval of several Bitcoin ETFs has provided a new avenue for institutional investment, adding further momentum to Bitcoin's rise.

Others believe it’s a simple matter of supply shock caused by Bitcoin’s diminishing supply. Proponents point to evidence that a new high is always achieved some time after Bitcoin’s halving event. This happens roughly every four years, where the number of new Bitcoins generated with every new block found (batches of data recording transactions on the Bitcoin network) is halved. Since April 2024, only 3.25 new BTC is produced as Bitcoin approaches the practical limit of 21 million coins in circulation. As of November 2024, almost 19.8 million have already been produced.

Current market dynamics

In the midst of a pullback towards $92,000 the sentiment within the crypto community and among investors hasn’t really differed from any other part of the year – always a mix of excitement and cautious optimism.

The general consensus among observers is that this milestone is a testament to Bitcoin's enduring appeal and robustness as a financial asset. Trading volumes have surged, reflecting heightened interest and participation from both retail and institutional investors. Mainstream adoption continues to grow, with more companies accepting Bitcoin as a form of payment and financial institutions integrating Bitcoin services into their offerings.

But economists will be wary to look at several factors influencing Bitcoin's price and market dynamics. On a macro-economic level, inflation concerns and geopolitical tensions have driven investors towards Bitcoin as a hedge against traditional financial market uncertainties. In particular, Russia has brought the world to a new level of nuclear threat not seen since the Cold War – with several Scandinavian nations already issuing pamphlets to citizens preparing them for war.

On the sidelines, positive regulatory developments, such as the approval of Bitcoin ETFs and clear guidelines from financial authorities, have boosted confidence in the market while there is expectation that the US will ease off on crypto restrictions under the incoming Trump administration.

Longer-term, technological advancements within the Bitcoin ecosystem also contribute to its price movements. Innovations like the Lightning Network, which aims to improve transaction speeds and reduce costs, are enhancing Bitcoin's utility and attractiveness even if adoption seems to have stalled. Could a new upgrade be coming to the network?

What's next for Bitcoin?

As we move into December, many analysts remain bullish on Bitcoin's potential to not only reach but also sustain the $100,000 mark. Experts point to the continued institutional interest, with major financial firms integrating Bitcoin into their portfolios, as a key driver for future growth. Additionally, the increasing acceptance of Bitcoin as a form of payment by large corporations and the development of more user-friendly platforms for buying and trading Bitcoin further bolster this optimistic outlook.

However, the ever-present threat of volatility remains a significant concern with Bitcoin, while market manipulation and external shocks, such as geopolitical events or major technological failures, could lead to sudden market corrections. Should the Ukraine situation and that with the Middle East de-escalate, or if the new US government doesn’t move in expected crypto-positive currents, then the market should also cool down, along with that, Bitcoin price.

Whether Bitcoin will reach and hold the $100,000 mark in December remains to be seen, but one thing is clear: Bitcoin has firmly established itself as a major player in the financial world. As always, it's important for investors to stay informed, cautious, and responsible.