A good three weeks ahead of the New Year, the crypto market is already seeing fireworks, with Bitcoin cracking the magical USD 100,000 barrier for the first time on 5 December in the course of a tremendous rally. The ascent into the six-figure range was triggered in particular by the election of Donald Trump as the next US president. Regarded as a friend of Bitcoin, the new man in the White House is bearing this out by gathering like-minded people around him. Having first nominated the crypto-friendly Scott Bessent as treasury secretary, a few days ago the president-elect then announced he had appointed Paul Atkins to head up the SEC, the securities and exchange commission. As co-chairman of the Token Alliance, a lobby group for the crypto industry, the 66-year-old has, among other things, helped to develop best practices for crypto issues and trading.
Bitcoin has appreciated by around a half since the elections in the USA at the start of November. Indeed, the biggest and oldest digital asset has posted a rise of more than 130% since the turn of the year. A price of USD 100,000 means that the market value of all bitcoins in circulation is almost USDtn 2 – a sum around 50% higher than the market capitalisation of all SMI companies put together. The ascent of Bitcoin has stimulated demand for other cybercurrencies too, with some of them climbing even faster than the crypto pioneer this year. XRP, for instance, which ranks third in the coin universe as measured by market capitalisation, has more than quadrupled in value, while Dogecoin, launched as a “fun currency” by the Australian programmer Billy Markus in 2013, has increased as much as fivefold. This could in turn be related to the cybercurrency’s close ties with Elon Musk, who had in the past often spoken favourably of Dogecoin in his social media posts. Under Trump, the Tesla founder and billionaire is now working as an external advisor in the new US government.
That the rise of digital currencies is also reaching a broader audience is demonstrated by the capitalisation of the crypto market as a whole, which has now climbed to over USDtn 3.5. To compare, five years ago the figure was not even USDbn 200. The coins are not just being used for investment and speculation, however: they are increasingly found in everyday life. The number of traders who are able to take payment in the oldest cryptocurrency is rising all the time. While the number of providers of goods or services who accepted Bitcoin as a means of payment was still below 10,000 at the start of the year, shortly before the end of the year it is already over 13,000. Cathie Wood, founder of ARK Invest, expects crypto technology to revolutionise retailing, financial services and even digital ownership rights in the future. She sees deregulation especially as the key to fully unleashing the power of innovation and paving the way for a boom. This view is consistent with her price targets: the star investor anticipates Bitcoin hitting seven figures by 2030.
Many other cryptocurrencies are also rising in Bitcoin's wake. Ethereum, for instance, the world's second largest coin, has appreciated by around three quarters this year. Contrasting with Bitcoin, which primarily serves as a store of value, Ethereum pursues a different goal: the blockchain was created for decentralised applications, smart contracts and also non-fungible tokens (NFTs), and from a technological viewpoint has its nose in front. While Bitcoin is used as a “proof of work” consensus mechanism, Ethereum changed to “proof of stake” in 2022, which consumes significantly less energy. Solana has seen an even faster rise. Having been developed for rapid and scalable transactions, this token is increasingly coming to the fore in the decentralised finance (DeFi) and NFT sectors. According to its own figures, the blockchain processes up to 65,000 transactions per second (TPS), making it much faster than the competition.
Source: CoinGecko
