Since the election, over $4 billion has flowed into US-listed bitcoin ETFs, as bitcoin has become the best-performing asset class, surging more than 130% this year. This outpaces gold (up 32%) and the US market (up 25%). Trading in MicroStrategy, a popular leveraged bitcoin investment vehicle, hit a record $136 billion, surpassing the previous record set by GameStop in 2021. This surge is fueled by expectations of a more crypto-friendly US administration, possibly leading to a strategic bitcoin reserve and the appointment of a "crypto tsar" at the White House.
Bitcoin is often compared to digital gold and viewed as a hedge against potential financial crises, like a US debt default. Despite having no intrinsic value, yield, or dividends, its price is driven purely by sentiment and supply-demand dynamics. This has left some, like the author, who previously dismissed crypto, now watching in disbelief as its price continues to climb.
For many, bitcoin is currently a momentum play, where rising prices attract more buying. Despite its lack of acceptance as a widely-used payment form, bitcoin has disrupted finance, much like Trump’s impact on politics or social media's effect on news. The experience of those who sold too early is bittersweet, especially with stories of profits flooding news and social media.
Even those who once doubted bitcoin, such as Charles Schwab’s CEO, now express regret for not having bought in. Meanwhile, figures like El Salvador’s President Bukele, who made bitcoin legal tender in 2021, are enjoying significant profits, with the country’s bitcoin holdings now worth over $550 million. Some, in their enthusiasm for bitcoin gains, have even gone so far as to purchase absurdly expensive items, like a banana taped to a wall, as part of “artistic experiences.”
As the fear of missing out (FOMO) intensifies, the author wonders if it’s too late to join the “crypto bros,” acknowledging that, from a trading perspective, they might now consider buying on pullbacks.
