Bitcoin’s $100,000 moment will be a perfect storm

Once seemingly outrageous predictions about the trajectory of cryptocurrency bitcoin now look much less crazy. The digital coin's price has more than doubled year-to-date, inching closer to the $100,000 threshold and increasing the implied value of all bitcoin in circulation to almost $2 trillion. With a friendly White House, a buyer spending billions, and new financial products launching, there's reason to think it could stay there.

Donald Trump's US presidential election victory heralds an administration that has enthusiastically embraced crypto. During his campaign, the president-elect touted ideas like creating a strategic bitcoin reserve, support for "miners" who create new coins, and firing the US Securities and Exchange Commission Chair Gary Gensler, who has pushed back against exotic schemes.

Already, Trump's team has met with industry executives to discuss creating a White House job focused on cryptocurrency policy, Bloomberg reported.

That could nix litigation against cryptocurrency purveyors, or speed crypto-friendly legislation, further solidifying bitcoin's incursion into traditional finance. Under the first Trump administration, US traders gained access to regulated products like futures and options contracts. In early 2024, exchange-traded funds run by giants including BlackRock that track the spot price won approval, and now collectively hold $85 billion in digital assets. Following their roll-out, which opened crypto up further to retail buyers, bitcoin's price spiked.

Artificial intelligence is an endless devourer of data, power, chips, and above all, capital.

The latest novelty is options trading on those ETFs, which began Wednesday for BlackRock's  iShares Bitcoin Trust , drawing $2 billion in volume that day alone, according to Bloomberg. A derivatives market could smooth bitcoin's famed volatility, while pulling in buying from market makers.

It also helps that there's a $100 billion buyer with a seemingly inexhaustible appetite in MicroStrategy. The company owns about 1.6 percent of all bitcoin and said in October that it would raise $42 billion over three years to buy more. The market, for now, is eagerly feeding the beast: on Wednesday, MicroStrategy priced $2.6 billion of bonds bearing zero interest that can convert into stock.

Others are joining in. Some 78 companies together hold more than $80 billion, opens new tab in bitcoin as treasury assets, according to data from BitcoinTreasuries.net. They may be encouraged by MicroStrategy's example. Its shares, despite effectively being a bet on bitcoin, have outperformed the currency's vertiginous rise.

This is, to be clear, a moment of extreme hype, and "crypto winters" have crushed bitcoin's price before. Yet it's also a perfect storm of political and financial support. Now more than ever, the hype cycle might become self-sustaining.

Bitcoin rose 2.4 percent to $96,728 as of 1604 GMT and has climbed over 40 percent in the two weeks since Republican Donald Trump was elected as the next US president on Nov. 5.