According to CoinMarketCap, the price of Bitcoin has increased by more than 10% in the past 24 hours and surpassed the $90,000 mark on the evening of November 13, double the level at the beginning of the year. The market capitalization has thereby expanded to the threshold of $1.76 trillion.
Many believe that the recent surge in Bitcoin prices comes from the effect Donald Trump has had on the financial market after his re-election as US president.
Supply Shock
However, Jesse Myers, co-founder of Onramp Bitcoin, said that President-elect Donald Trump may not be the main cause of excitement in the cryptocurrency market.
“If you’re wondering what’s going on with Bitcoin, yes, the upcoming crypto-friendly administration has provided a recent catalyst. However, that’s not the main story here,” Jesse Myers said in a post on X.
Instead, Mr. Myers argues that it is the supply shock that has built up after the halving event that is the main reason for the asset's continued rise in price.
“There is not enough supply at current prices to meet demand,” said the Onramp Bitcoin co-founder, stressing that the price balance of supply and demand must be restored.
In April, Bitcoin completed its fourth halving event. This event occurs approximately every four years, which adjusts the Bitcoin mining reward by half compared to the previous cycle. This event creates scarcity because it reduces the rate at which new Bitcoins can enter the market.
During the halvings in 2012, 2016, and 2020, Bitcoin prices increased multiple times from the time of the event to the cycle peak.
With this cyclicality, Myers warns that a bubble will soon occur because there has never been an asset class in the world where the new supply is halved after each cycle like this.
“The only way to do that is to increase the price, which will lead to frenzy and bubbles, but that's how things work,” said Myers, noting that this has happened before after three previous halvings.
At the height of the 2021 crypto boom, mining margins were as high as 90%, according to estimates from Marathon Digital Holdings. When the market was hot, miners were willing to borrow at high interest rates of up to 20% to expand.
However, the bubble then burst and left companies without enough money to cover debt servicing costs.
Compute North, which owns several large-scale mining facilities, filed for bankruptcy in September 2022.
Core Science, a publicly traded mining company, also filed for bankruptcy three months later.
Argo had to sell its flagship Helios mining facility, which cost about $1.5 billion to build, for $65 million also in December 2022.
Bitcoin Hasn't Peaked Yet
Onchain analyst James Check echoed this sentiment, comparing Bitcoin's market capitalization to gold, which has added about $6 trillion over the past year but has "hundreds of billions of new and recycled supply coming to market."
Meanwhile, Bitcoin has a market capitalization of just $1.6 trillion and is “absolutely scarce for holders who have experienced multiple price drops,” so he predicts the price will rise even higher.
Anthony Scaramucci, a former Trump ally and financial expert, hinted at the same thing when speaking to those who have not invested long-term in Bitcoin.
“It may feel like you missed out, but you didn’t. It’s still too early,” Scaramucci wrote on X.
According to Scaramucci, the US will establish a strategic Bitcoin reserve and other countries will have to follow suit, along with asset allocators and institutional managers.
As of now, 94% of all Bitcoins that have been mined are either in circulation or have been lost, which means there are only about 1.2 million Bitcoins left to be mined, which will put further pressure on supply and demand.
International experts are even more optimistic about the prospects of Bitcoin and the cryptocurrency market, Mr. Mike Colonnese, an analyst at H.C. Wainwright Investment Bank, said that Bitcoin is still in an uptrend.
In particular, investor optimism will continue for the rest of 2024 and forecasts that Bitcoin price could reach 6 figures (ie over 100,000 USD/BTC) by the end of this year.
Similarly, Mr. Matt Hougan, Chief Investment Officer of Bitwise Asset Management, assessed that with the current interest rate environment, cryptocurrencies are entering a new cycle and the trend is still growth.
Bitcoin’s own daily volatility can fluctuate by 5-10% while other cryptocurrencies can see much higher amplitudes. Therefore, investors should balance their portfolios, only allocating 5-10% of their assets to venture investments.
Currently, Vietnam has not recognized Bitcoin as a legal investment channel. Therefore, investors will not be protected if legal risks or losses arise.
