Summary Bitcoin just hit a fresh all-time high, and is now up 64% YTD. Investors are salivating over the prospects for the Bitcoin halving event in April, and have pumped tens of billions into Bitcoin ETFs since the start of the year. I view Bitcoin as better than 50/50 to top $100,000 this year, but the 100% rally since November is likely capping long-term upside for investors in BTC. This week, Bitcoin USD ( BTC-USD ) took out its all-time high and is now up about 64% YTD. Bullish analyst calls have mounted for the coin to hit $100,000+, while bears have drawn comparisons to past speculative bubbles. This comes ahead of the highly anticipated Bitcoin halving event. Computer models anticipate this will happen in the third week of April, about 10-12 days after the total solar eclipse expected for Texas and parts of the Midwest on April 8th. If Bitcoin halving and a solar eclipse occurred on the same day, I think it would break the internet! Anyways, Bitcoin is on the move again, with one analyst calling for $115,000 Bitcoin after halving. While the fundamental value of Bitcoin is something that can be debated, the inflows and momentum are certainly there, putting the potential for $100,000 in sight. Bitcoin Price History (Seeking Alpha) Why Is Bitcoin Rising? Supply and demand. Billions of dollars are flowing into Bitcoin ETFs, with $13 billion in flows going into the large iShares Bitcoin Trust ETF ( IBIT ) alone since its January launch. There's a limited amount of Bitcoin out there, so sellers are naturally able to ask more and more for their BTC. Like with gold, some Bitcoin is mined each year. Also like gold, the amount mined is relatively small compared to the total amount of BTC outstanding. Bitcoin's history over the past 5 years shows a pattern of boom and bust, where investors (speculators) push the coin rapidly higher. This eventually causes some people to cash in, possibly in a panic when the price of BTC is falling as it did in 2022. Right now, not many investors want to sell, and seeing that Bitcoin is skyrocketing in price, they're probably justified in waiting a while. For Bitcoin bulls, the main catalyst has switched from the ETF approval to the Bitcoin halving event in April. For those looking for a brief primer on Bitcoin halving, it's an event in April that halves the reward for miners after a predetermined amount of Bitcoin has been mined. This will reduce the expansion of the Bitcoin money supply (i.e., inflation) from its current rate of around 1.75% per year to roughly 0.85% per year. My research on gold has shown that this predicts price better than you'd think. The supply of gold increases at 1.5% to 2% annually on average and the price tends to be higher when the supply grows slower and vice versa. Of note, crypto evangelist Michael Saylor recently argued that Bitcoin is better than gold and is likely to "eat" gold. There's a saying in economics that "the cure for high prices is high prices." High prices tend to bring supply out of the woodwork in the long run-that's how markets work. But in the short run, higher prices might actually increase demand ((FOMO)) and decrease supply. This could power Bitcoin to $100,000 in the short run, where sellers might step in at the key psychological six-figure level. I think that's what's going on here- there's no strong reason to believe that the long-term fundamental picture for Bitcoin has dramatically changed in the last 90 days. I still believe Bitcoin will continue to move higher in the long term, but there are likely all kinds of speculative short-term trades being made in Bitcoin now. The ETF inflows are certainly real, but I don't know if they justify Bitcoin going up ~250% over the last year and ~100% in the last 4 months. However, whether Bitcoin's fundamental value is above or below the current price is unlikely to affect whether it will top $100,000 this year or not. The price of Bitcoin rapidly going up sets favorable conditions for short-term traders looking to ride a momentum wave, while reducing returns for long-term investors' courtesy of the higher purchase price. Will Bitcoin Top $100,000? Bitcoin presents an alternative to standard central bank currencies and has gained a cult following as a result. Around the world, everyone feels the value of their dollar (or euro, peso, pound, or yen) slowly decreasing, and Bitcoin offers a simple proposition-put your savings in something that will go up instead. Bitcoin spread like wildfire in the 2010s-a 2021 survey of millionaires by CNBC found that over half of millennial millionaires had 50% or more of their wealth in crypto. This is compared with 4% of boomer millionaires who owned any crypto at all. Even in EU countries where social safety nets are deep and interest in the stock market is low, crypto has become the go-to investment over time for younger investors. Today, search interest in Bitcoin is approaching the all-time highs set in 2017-2018 and 2021. The need for Bitcoin in developed countries is nothing compared to what it is in developing countries, where inflation, war, and a lack of safe places to put money have made Bitcoin increasingly popular among the middle classes. In countries like India, Argentina, Nigeria, and Vietnam, Bitcoin is an increasingly popular choice for savings, and as a backup currency thanks to the Lightning Network . El Salvador even went as far as making Bitcoin a co-official currency and investing state funds in BTC, scoring a small but rapidly increasing profit for the country's Treasury. The Fed and ECB don't particularly like Bitcoin , but they haven't been able to sway the inevitable adoption by an ever-increasing set of people. When asked on Squawk Box, Donald Trump indicated that he would continue tolerating Bitcoin, citing customers paying for shoes with the coin. To all of these points, we know Bitcoin is tremendously valuable. However, we don't know exactly how valuable Bitcoin is, which in part explains the major volatility that the coin has experienced over its lifetime. The momentum and sentiment are 100% to the upside right now, and there is little in the way of technical "resistance" to stop Bitcoin from moving higher. Given the factors in play here- high (but uncertain) fundamental value + high inflows + high price momentum + increasing media interest, I believe the end result is that Bitcoin tops $100,000 on this wave, possibly shortly before/after the halving event. If some significant macro events happen or stocks crash this will get derailed, but the only real catalyst for Bitcoin to go down in the short run is a rapid change in sentiment. Eventually, this is bound to happen, but likely not before investors manage to pump tens of billions more in money into Bitcoin ETFs and the financial media has time to massively hype the Bitcoin halving over the next 6 weeks. With Bitcoin at $73,000, I think the odds are better than 50/50 at it hitting $100,000 this year. Bolstering the case, the options market is starting to see an increasing amount of bets on $100,000 Bitcoin. Bottom Line Bitcoin has a ton of momentum ahead of its expected April halving event and has broken out to all-time highs. With money continuing to flow in, $100,000 is increasingly in sight in the short run. In the long run, I expect Bitcoin to continue to go up, but wonder if the rally has extended too far and whether this is capping the upside of new investments in BTC. However, in the short run, the overwhelming direction seems to be up. If you're buying Bitcoin, I'd slowly dollar-cost-average to smooth out the volatility and look to add when the pendulum of sentiment eventually turns.
