Bitcoin: 3 reasons for its strong comeback

©© Unsplash/Michael Förtsch

Bitcoin has experienced one of the biggest surges in its history in recent days, even exceeding $90,000 for the first time on Wednesday, November 13. This increase, which stands at more than 110% since the beginning of the year, is partly explained by Donald Trump's victory. But not only that.

The scarcity effect

Because 2024 is marked by the “halving” of Bitcoin, an important concept to understand in order to grasp its dynamics. This is an event programmed into the code of the cryptocurrency, occurring approximately every four years. This year marks the fourth halving in Bitcoin history.

During a halving, the reward given to miners, i.e. those who validate transactions on the network, is reduced by half. As a result, the quantity of new Bitcoins created and put into circulation also decreases by half, creating upward pressure on the price since they are rarer. Historically, halvings have been followed by significant increases in the price of Bitcoin in the following months.

The approval and launch of Bitcoin ETFs

On January 10, 2024, the Securities and Exchange Commission (SEC), the U.S. financial markets regulator, approved Bitcoin spot ETFs (Exchange Traded Funds). This is a major milestone in the cryptocurrency industry, as it allows for the creation and trading of exchange-traded funds that directly hold Bitcoin. They allow investors to gain exposure to it through traditional brokerage accounts, without having to directly hold or manage cryptocurrencies.

This decision gives Bitcoin a significant level of regulatory legitimacy, which could reduce investor concerns about the market as a whole.

Donald Trump's victory

The tone has changed drastically in 9 years. While he strongly opposed cryptocurrencies during his 2016 presidential campaign, Donald Trump made it a campaign argument. He thus pledged to make the United States the “crypto capital of the planet “. The president-elect even proposed creating a strategic reserve of Bitcoins, suggesting the purchase of cryptocurrencies in large quantities by the American government.

Investors, meanwhile, are anticipating a more favorable regulatory environment. Indeed, Trump has promised to fire SEC Chairman Gary Gensler, known for his strict approach to cryptocurrency regulation. He also expressed interest in the development of the Bitcoin mining industry in the United States.

These factors have triggered a significant wave of speculative purchases, affecting both Bitcoin and other cryptocurrencies such as Dogecoin.

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