Fortune Article

A lot of people really dislike crypto—there is an entire community who spend their days decrying it as a tacky, energy-guzzling scam. They may or not have a point. But sooner or later, even the haters will have to reconcile themselves to the fact that crypto is here to stay and that the industry’s flagship asset, Bitcoin, is more likely than not to break $100,000 by the end of the year.

If that sounds far-fetched, consider that Bitcoin just crossed the $50,000 mark and is not that far off from the all-time high of around $69,000 it reached in late 2021. The latest rally got an extra boost from an uptick in trading over Lunar New Year, but was primarily driven by a rush of new liquidity from Bitcoin ETFs and the likelihood of lower Fed rates in comings months. And then there is the impending halving, which will see the supply of new Bitcoins mined every day drop from 900 to 450. Supply and demand and all that.

There is also history. I’ve been skeptical about those who claim the crypto market runs in four-year cycles, but as I watch a familiar series of events play out for a fourth time, I think there might be something to it. That cycle involves nothing much happening for two years or so, followed by a gradual run-up and then a speculative free-for-all, and finally a calamitous event that pops the bubble and brings everyone to their senses.

The first cycle peaked in 2013 with Bitcoin hitting a then-unthinkable $1,200, before falling to $100 in the wake of a catastrophic hack. The second saw Bitcoin hit nearly $20,000 in 2017, followed by a regulatory crackdown on ICOs that sent the price all the way down to $3,000. Next came the mania of 2021, which saw Bitcoin hit its most recent all-time high before the collapse of Sam Bankman-Fried’s empire of fraud sent it down to $16,000. You get the idea. But also notice a key feature of these cycles: The floor price for Bitcoin never falls anywhere near the previous one, and each all-time high far outstrips the previous one. By this logic, Bitcoin hitting $100,000 isn’t just a possibility—it’s a near certainty.

If the idea of financial cycles doesn’t grab you, there’s also the theoretical argument that Bitcoin’s basic value proposition has grown stronger each year. Recall that Bitcoin came about in the first place as a protest against the spectacle of governments printing massive amounts of money to bail out banks, and then continuing to spend like drunken sailors. The case for Bitcoin in the early days was a form of money that could be exchanged freely and was not subject to inflation or government control. Given the insane levels of U.S. debt that I wrote about yesterday, that case looks more appealing than ever.

Does this mean it’s a sure thing Bitcoin hits $100,000 by the end of year? Of course not. But ask yourself, if you had to wager $50 on whether Bitcoin will be above or below that number, would you take the over or the under? As for crypto going away, that seems more far-fetched than ever. The haters may never come to like it, but they will have to get used to it.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

DECENTRALIZED NEWS

After launching a $1,000 phone that had no appeal beyond free tokens, Solana is trying again with a second version of the device that will sell for $450 and reportedly has already lined up 100,000 paying customers. (CoinDesk)

During his cross-examination by lawyers for Bitcoin developers, a U.K. judge told fake Satoshi Craig Wright to stop making "irrelevant allegations" as he offered shifting stories to explain dubious documents. (CoinDesk)

Court documents show the sentencing of Binance founder CZ, slated for Feb. 25, is now set to take place on April 30 for unstated reasons. (CNBC)

Peter Thiel's Founders Fund reportedly invested $200 million in Bitcoin and Ethereum in mid-2023, a sign VCs may be moving back into crypto. (Reuters)

Digital Currency Group's latest shareholder letter reported a strong fourth quarter, with higher earnings and a boost in the company's valuation and investment portfolio. (Fortune)