Bitcoin is at all-time highs. Here's why.

In November 2022, crypto was dead and gone. Bitcoin was worth a measly $15,000, a 78% drop from the all-time high of $69,000 just the previous year. ETH, the second largest cryptocurrency, had dropped from almost $5,000 to just $900. Venture deals had basically frozen to a halt. And, of course, the exchange FTX just evaporated $9.7 billion dollars, giving the industry a stain it’s still trying to wipe off. 

But here we are two years later, and one bitcoin is now quietly worth more than $90,000. How in the world is that possible? Didn't Jason Calacanis, one the tech world's most famous angel investors and podcast hosts, tell us all to pivot to AI?

It turns out that Jason’s infamous tweet was a bottom signal. On June 15th, 2023, just a week after the tweet, BlackRock, the world’s biggest asset manager, filed for a bitcoin ETF which would make it possible to buy bitcoin on the stock market. The rest of the year was basically up only, first driven by anticipation of it being approved and then, once it was approved in January, by tens of billions of boomer money.

By March 2024, bitcoin had achieved a new all-time high of $73,000. However, it then stalled because of some supply overhang issues, including a $2.9 billion nuke from the German government. But still, it didn’t drop much. It just, in trader terms, chilled around previous all-time highs. 

This went on for 236 agonizing days. I’m active on Crypto Twitter. Trust me. Morale was really, really low by the end of summer. 

The catalyst to get us out of this God-forsaken range was the election of Donald Trump. To say that he’s friendlier to crypto than the Biden administration would be the understatement of the century. His promises read like something out of a bitcoin bible:

• Never sell the government’s stash of bitcoin.

• Explore creating a national strategic reserve of bitcoin, which means buying bitcoin with government funds.

• Fire Gary Gensler, the SEC Chairman who is very opposed to crypto, on day one (which he actually can’t technically do). 

• Create a bitcoin and crypto presidential advisory council.

• Work for all future bitcoin to be mined (created) in America.

Obviously, the market got the memo. Since he’s won, crypto has rapidly and viciously repriced upward in anticipation of the national strategic reserve and a much lighter regulatory environment. 

Of course, it’s possible that Trump is just full of it. But so far, it does seem like the promised lighter regulatory environment is already coming to fruition, with SEC Chair Gary Gensler signaling a resignation soon and the Manhattan US Attorney scaling back crypto cases.

So how much more juice does this bull run have? It’s hard to say, but judging from the indicators that have previously signaled tops, we still have some room to run. 

The first indicator is the Coinbase app ranking. The market typically tops when Coinbase, the largest US exchange, hits the top of the App Store. Right now, it’s still just third for finance and 46th overall, signaling that peak mania hasn’t yet hit. 

The second indicator is bitcoin dominance (BTC.D), which just means how much of the crypto market bitcoin constitutes. BTC.D drops as the bull run goes on because people sell their bitcoin to chase the greater returns that riskier, “alt” cryptos can bring. 

BTC.D was around 40% at the end of the last bull run. It’s currently at 60%, meaning that there is still lots of catching up to do for alts. 

Ultimately, there is always a risk when investing in anything, especially crypto. But so far it’s been a fabulous comeback for the often ridiculed industry, and if the typical metrics hold, there should still be a bit more dancing before the music stops.