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

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

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.

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.

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.

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.

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.

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."

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.

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.

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.

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."

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.