Bitcoin Hit $100k. What's Next?

Summary

The Journal: Bitcoin Hit $100k. What's Next?

Hosted by Kate Linebaugh and Ryan Knutson, with Jessica Mendoza | Released: December 11, 2024

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Introduction

In the December 11, 2024 episode of The Journal, hosts Kate Linebaugh and Ryan Knutson delve into the monumental milestone of Bitcoin surpassing $100,000. This episode explores the factors leading to this surge, the current state of the cryptocurrency market, regulatory challenges, political influences, and what the future might hold for Bitcoin and the broader crypto industry.

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Bitcoin's Meteoric Rise

The episode opens with Kate Linebaugh introducing insights from Alexander Osipovich, a seasoned Bitcoin journalist with seven years covering the cryptocurrency landscape.

Alexander Osipovich [00:12]:
"Bitcoin is not for the faint of heart. It's very volatile and periodically it has these massive drawdowns where it loses much of its value."

Bitcoin's journey has been marked by extreme volatility, with significant peaks and troughs. Despite hitting an all-time high of $50,000 and then plunging by 22% to below $42,000, key cryptocurrencies like Bitcoin have shown resilience, rebounding after months of dramatic losses.

Alexander Osipovich [00:51]:
"I quite like the one that was in late 2017 when Bitcoin got nearly to $20,000. So I felt like that was the first time that bitcoin really broke out into the broad public consciousness and grandma was buying bitcoin."

Reflecting on past milestones, Osipovich reminisces about Bitcoin's ascent in late 2017, marking its entry into mainstream awareness.

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Surge to $100,000 and Political Catalysts

The recent surge to $100,000 is attributed to several factors, notably the political climate and endorsements.

Alexander Osipovich [01:28]:
"What happened late in the Evening on Wednesday, December 4, Bitcoin traded above $100,000 for the first time. This was the culmination of a rally that began with the election of Donald Trump."

Donald Trump's pro-Bitcoin stance and commitment to appointing crypto-friendly officials have significantly influenced the market sentiment.

Trump's Statement [09:29]:
"It will be the policy of my administration, United States of America, to keep 100% of all the Bitcoin the US government currently holds or acquires into the future, we'll keep 100%. I hope you do well."

Trump's proposal to create a "Bitcoin Strategic Reserve" mirrors the Strategic Petroleum Reserve, suggesting substantial government involvement in Bitcoin accumulation and storage. This strategy is perceived as bullish for Bitcoin, potentially limiting its available supply and driving up prices.

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Crypto Winter and Recovery

Two years prior, the crypto market faced a severe downturn, often referred to as the "crypto winter," marked by plummeting values and high-profile failures like the collapse of the FTX exchange.

Alexander Osipovich [03:24]:
"That was a low point. Bitcoin fell to around $16,000 per coin. Then many people at that point left crypto for dead and didn't think it was going to come back."

The aftermath saw intensified skepticism towards the industry, especially following the FTX debacle and associated regulatory crackdowns.

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Regulatory Challenges and SEC Crackdown

The U.S. Securities and Exchange Commission (SEC) has been at the forefront of regulating the crypto industry, advocating for the application of traditional securities laws to cryptocurrencies.

Alexander Osipovich [04:11]:
"And that is just the latest move and a crackdown, it appears, against crypto companies in general."

Crypto leaders have expressed frustration with the SEC's approach, arguing that existing laws are outdated and unsuitable for digital assets.

Unnamed Crypto Expert [04:49]:
"The leaders of the crypto industry were definitely very frustrated with the approach of the SEC."

In response, crypto firms have not only fought regulatory actions in courts but have also ramped up political lobbying to shape favorable legislation.

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Political Lobbying and Election Influence

The crypto industry's pivot towards political engagement became pronounced during the 2024 election cycle, with significant financial contributions aimed at electing pro-crypto candidates.

Alexander Osipovich [05:18]:
"They also turned their attention to political organizing and raising money for different candidates to try to get a more friendly regime in place in Washington."

Through super PACs and advocacy groups like Coinbase-backed Stand with Crypto, the industry sought to influence legislative outcomes.

Stand with Crypto [06:04]:
"Crypto equals innovation. Innovation equals jobs. That's why I'm a crypto voter. Don't let anyone else decide your future. Make a plan to vote."

This strategic political engagement resulted in nearly 300 pro-crypto candidates securing seats in Congress, signaling a potentially more favorable regulatory environment.

Alexander Osipovich [07:12]:
"So going into this next administration, the crypto industry is in a pretty good spot."

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Appointment of Paul Atkins and Market Reaction

Donald Trump's administration appointed Paul Atkins, a former SEC commissioner with crypto-friendly views, as the new head of the SEC.

Paul Atkins [11:08]:
"The rules impede financial innovation. That's one reason why the SEC should be there with its ear to the ground to figure out which way are things moving and let's try to accommodate activity that's not criminal and enable markets to flourish."

Atkins’ approach contrasts with his predecessor Gary Gensler’s stringent enforcement, favoring a light-touch regulatory framework that could potentially ease the industry's burdens.

Cryptocurrency Market Expert [12:03]:
"The crypto market rallied after Atkins was announced as the head of the SEC."

Combined with Federal Reserve Chairman Jerome Powell's positive remarks about Bitcoin not competing with the U.S. dollar, these developments propelled Bitcoin beyond the $100,000 mark.

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Mainstream Adoption and Future Outlook

Bitcoin's ascent is also attributed to its growing acceptance as "digital gold" and its fixed supply of 21 million coins, fostering its use as a store of value amidst institutional distrust and inflation fears.

Alexander Osipovich [12:33]:
"What seems to have happened with bitcoin in particular... people have really seized on this idea that it is a form of digital gold."

Despite reaching a new high, the future remains uncertain. Experts predict continued volatility, with Bitcoin potentially reaching $200,000 or $250,000, followed by possible significant corrections.

Alexander Osipovich [14:23]:
"Bitcoin really could go either way. There are bitcoin people who think it's going to hit 200,000 or 250,000."

The consensus suggests that Bitcoin will likely remain a roller coaster, balancing between its potential for substantial gains and the inherent risks of market fluctuations.

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Conclusion

The episode of The Journal underscores Bitcoin's significant milestone of hitting $100,000, driven by favorable political developments, strategic regulatory appointments, and its evolving role as a mainstream financial asset. While the outlook remains optimistic, the volatility inherent to cryptocurrencies suggests that Bitcoin's journey ahead will continue to be dynamic and unpredictable.

Additional Reporting by Dave Michaels and Caitlin Ostroff.

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Notable Quotes

• Alexander Osipovich [00:12]:
  "Bitcoin is not for the faint of heart. It's very volatile and periodically it has these massive drawdowns where it loses much of its value."

• Alexander Osipovich [01:28]:
  "What happened late in the Evening on Wednesday, December 4, Bitcoin traded above $100,000 for the first time."

• Trump [09:29]:
  "It will be the policy of my administration, United States of America, to keep 100% of all the Bitcoin the US government currently holds or acquires into the future, we'll keep 100%. I hope you do well."

• Paul Atkins [11:08]:
  "The rules impede financial innovation. That's one reason why the SEC should be there with its ear to the ground to figure out which way are things moving and let's try to accommodate activity that's not criminal and enable markets to flourish."

• Alexander Osipovich [14:23]:
  "Bitcoin really could go either way. There are bitcoin people who think it's going to hit 200,000 or 250,000."

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This comprehensive summary encapsulates the key discussions and insights from the episode, providing a clear understanding of Bitcoin's current positioning and future trajectory within the financial landscape.

Transcript

[Kate Linebaugh]

Our colleague Alexander Osipovich has covered bitcoin for seven years and he has a takeaway.

[Alexander Osipovich]

Bitcoin is not for the faint of heart. It's very volatile and periodically it has these massive drawdowns where it loses much of its value. Bitcoin at $20,000, we got Bitcoin hitting.

[Unnamed Crypto Expert]

A new all time high.

[Alexander Osipovich]

It topped $50,000 a coin bit plunged.

[Unnamed Analyst]

By 22% to below $42,000.

[Alexander Osipovich]

Some key cryptocurrencies like bitcoin did rebound a bit today, but that's only after months of steady dramatic losses.

[Kate Linebaugh]

So the price of bitcoin near an all time high. What's your favorite bitcoin milestone?

[Alexander Osipovich]

Well, I quite like the one that was in late 2017 when Bitcoin got nearly to $20,000. So I felt like that was the first time that bitcoin really broke out into the broad public consciousness and grandma was buying bitcoin. The ones since then have felt like a season recap or something to me.

[Kate Linebaugh]

Okay, and if grandma bought Bitcoin at 20,000, how's grandma doing today?

[Alexander Osipovich]

Grandma would have gotten about a five.

[Kate Linebaugh]

Fold return on her investment because last week crypto hit a major milestone.

[Alexander Osipovich]

What happened late in the Evening on Wednesday, December 4, Bitcoin traded above $100,000 for the first time. This was the culmination of a rally that began with the election of Donald Trump. Trump has lately styled himself as a pro bitcoin pro Crypto candidate promised to appoint people who are crypto friendly adopt crypto friendly policies. And the crypto market has responded to that.

[Kate Linebaugh]

Welcome to the Journal, our show about money, business and power. I'm Kate LINEBAUGH. It's Wednesday, December 11th. Coming up on the show, what bitcoin's rally tells us about where crypto is headed next.

[Unnamed Sponsor]

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[Kate Linebaugh]

Just two years ago, the vibe in the crypto world was so bad that it was considered a crypto winter. At that time, cryptocurrencies were plunging, firms were filing for bankruptcy, and then the crypto exchange FTX imploded.

[Alexander Osipovich]

That was a low point. Bitcoin fell to around $16,000 per coin. Then many people at that point left crypto for dead and didn't think it was going to come back.

[Kate Linebaugh]

What was the reputation of crypto at that point?

[Alexander Osipovich]

Crypto's reputation took a beating after the collapse of ftx. There was the sense that if somebody who was a fairly well respected figure in crypto, like Sam Bankman Fried, turned out to be a crooked, then, well, what did that say about the rest of the industry and regulators? Government officials took a very skeptical look at crypto. Kind of wanted to hit the brakes on its development. And for a while, regulators were on the warpath, bringing different crypto cases, trying to rein in this wild west of an industry.

[Kate Linebaugh]

And if crypto is the wild west, the sheriff has been the securities and Exchange Commission. The sec, which regulates stocks and bonds, has argued that the crypto industry should be regulated like traditional finance. And the SEC has filed lawsuits against some of the biggest players in crypto. Securities and Exchange Commission filing charges against Binance. The SEC is suing crypto trading platform Coinbase.

[Alexander Osipovich]

And that is just the latest move and a crackdown, it appears, against crypto companies in general.

[Kate Linebaugh]

How did the crypto world respond to this?

[Unnamed Crypto Expert]

The leaders of the crypto industry were.

[Alexander Osipovich]

Definitely very frustrated with the approach of the sec. They argued that the laws that the SEC was using, these securities laws, were just outdated and not really relevant to the way cryptocurrencies worked. Some of them said that, well, we want to register, we want to be regulated, but these regulations just don't make sense for what we do.

[Kate Linebaugh]

The crypto firms fought back in court, but they did something else too.

[Alexander Osipovich]

They also turned their attention to political organizing and raising money for different candidates to try to get a more friendly regime in place in Washington.

[Kate Linebaugh]

Interesting. What did they do to do that?

[Alexander Osipovich]

Well, there's a long tradition in America of spending a lot of money to elect candidates that are friendly to your industry. And the crypto industry picked up that playbook. It was a very big spending industry that essentially hadn't really existed before. On the campaign finance front, in the.

[Kate Linebaugh]

2024 election cycle, crypto firms spent big. They funneled tens of millions of dollars into super PACs backing pro crypto candidates and trying to get crypto minded voters to the polls with ads like this.

[Unnamed Political Ad Voice]

Crypto equals innovation. Innovation equals jobs. That's why I'm a crypto voter. Don't let anyone else decide your future. Make a plan to vote.

[Kate Linebaugh]

One advocacy group backed by Coinbase called Stand with Crypto gave candidates a rating from A to F based on their support for the crypto industry, as the crypto industry is like, they're like, okay, we need some allies in D.C. what were they looking for? What are their aims?

[Alexander Osipovich]

One of the major aims of the crypto industry was to get a new regulatory framework written for crypto in the U.S. essentially, the crypto industry has lobbied for new rules to be written by Congress that would essentially allow a sort of light, easy to use regulatory framework for crypto companies to offer their coins, offer trading in different digital coins, and have it all be blessed by regulators. That is a big item on the crypto wish list.

[Kate Linebaugh]

And this big election push worked in the end. According to Stand with crypto, nearly 300 pro crypto candidates were elected to Congress and some lawmakers seen as hostile to the industry were voted out. So going into this next administration, the crypto industry is in a pretty good spot.

[Unnamed Crypto Expert]

Yes, the crypto industry is definitely very.

[Alexander Osipovich]

Excited about Donald Trump and the incoming administration.

[Kate Linebaugh]

Coming up, what a Trump White House could mean for crypto.

[Unnamed Sponsor]

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[Kate Linebaugh]

When Trump won the election, the crypto world celebrated by driving up the crypto market.

[Alexander Osipovich]

A cryptocurrency surge that's been gripping Wall street since President Elect Trump won the election last week. We're talking about cryptocurrency. It's hitting record highs after the election. Bitcoin hit another record high yesterday. There was a lot of excite among bitcoin investors that Trump would be great for crypto, great for bitcoin, and he's essentially friendly to the crypto industry.

[Kate Linebaugh]

Trump has even said he'd have the government own a lot of crypto.

[Alexander Osipovich]

One of his pledges has been to create a bitcoin strategic reserve. The idea is essentially if the US Government comes into possession of bitcoin, for instance, through seizing bitcoin in some kind of law enforcement action, it wouldn't sell those bitcoins. Instead, it would hold them and kind of gradually amass this stockpile.

[Donald Trump]

It will be the policy of my administration, United States of America, to keep 100% of all the Bitcoin the US government currently holds or acquires into the future, we'll keep 100%. I hope you do well.

[Unnamed Crypto Expert]

Please.

[Alexander Osipovich]

The name of this concept, the Strategic Bitcoin Reserve, sounds a lot like the Strategic Petroleum Reserve, which is a giant.

[Unnamed Crypto Expert]

Stash of crude oil that we have.

[Alexander Osipovich]

That'S owned by the government. And if you apply that idea to Bitcoin, it becomes very bullish for the price of Bitcoin because you essentially have a giant holder locking up some of the supply and buying it and not selling it.

[Kate Linebaugh]

Another sign of Trump's support of crypto came last week when he announced his pick for the new head of the sec, a former SEC commissioner named Paul Atkins.

[Unnamed Crypto Expert]

Paul Atkins is a Republican former regulator who generally has taken the view that the government should stay out of financial markets, be a kind of light touch regulator, not go too heavy on enforcement actions.

[Kate Linebaugh]

Atkins has been running a consulting company, Potomac Global Partners, whose clients include crypto firms. One of Potomac's clients was ftx.

[Unnamed Crypto Expert]

The general expectation in the industry is that a Paul Atkins led SEC will be less tough in terms of enforcement and might even drop some of the current lawsuits that are pending against crypto firms.

[Kate Linebaugh]

Here's Atkins on a podcast last year talking about crypto regulation.

[Unnamed Analyst]

The rules impede financial innovation. That's one reason why the SEC should be there with its ear to the ground to figure out which way are things moving and let's try to accommodate activity that's not criminal and enable markets to flourish.

[Unnamed Crypto Expert]

Because if it's in his comments that he's made about crypto so far, he's taken the view that the existing sec, under the leadership of Gary Gensler, went too far in terms of enforcement actions against crypto. He's argued that it would have made more sense to create some rules of the road for crypto and not just go and try to find a bunch of companies.

[Kate Linebaugh]

What was the market reaction to the announcement of Atkins as the chair of the sec?

[Unnamed Crypto Expert]

The crypto market rallied after Atkins was announced as the head of the sec. There were a few good things that happened for crypto that day. Besides Atkins, Jerome Powell, the chairman of the Federal Reserve, also made some comments about how he didn't see Bitcoin as a competitor to the US Doll dollar. All that together, along with the general sentiment that's existed in the market since Trump won, pushed Bitcoin above $100,000 for the first time.

[Kate Linebaugh]

What does all of this excitement say about crypto right now?

[Alexander Osipovich]

Well, people have certainly tried to write off crypto before. Several times it has crashed and lost much of its value, and people have written obituaries for bitcoin. But then it's come roaring back. What seems to have happened with bitcoin in particular, and I'm not talking about the many other cryptocurrencies out there, people have really seized on this idea that it is a form of digital gold. One of the fundamental properties built into it is limited supply. There will never be more than 21 million bitcoins. Most of those are already in existence. And so if there's demand for it, that is just going to drive the price up. Just basic laws of supply and demand. And at a time when we have lost trust in a lot of our institutions, people are worried about inflation. There's this idea that maybe it's nice to. To store value in bitcoin much the same way that people might have bought gold bars before.

[Kate Linebaugh]

Does Bitcoin hitting 100,000 mean it is no longer a sort of fringe thing? And it's sort of becoming more establishment than it used to be?

[Unnamed Crypto Expert]

Bitcoin has definitely become more mainstream over the years. I mean, 10 years ago, it was this weird niche thing that. That most people hadn't heard of and the people who were into various online.

[Alexander Osipovich]

Subcultures that most people didn't even know about.

[Unnamed Crypto Expert]

But over the years, what generally happened is that there have been signs of mainstream adoption. The fact that the president elect of the United States is now talking positively about bitcoin as another sign of mainstream adoption.

[Kate Linebaugh]

And Bitcoin's rise to 100,000 has been a roller coaster, as we've mentioned. Which direction do you think bitcoin's going in from here?

[Alexander Osipovich]

Bitcoin really could go either way. There are bitcoin people who think it's going to hit 200,000 or 250,000.

[Unnamed Crypto Expert]

That said, historical performance suggests that it.

[Alexander Osipovich]

Tends to rally to these very high peaks and then crash dramatically.

[Unnamed Crypto Expert]

So it really could go either way.

[Alexander Osipovich]

It's likely to continue being a roller coaster.

[Kate Linebaugh]

That's all for today. Wednesday, December 11th. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Dave Michaels and Caitlin Ostroff. Thanks for listening. See you tomorrow.