On December 5, Bitcoin rallied past $100,000, marking a significant milestone for the crypto industry. The coin has been on an uptrend ever since Donald Trump won November’s Presidential election, signaling an end to the regulatory war on blockchain companies declared by Joe Biden’s administration through the Securities and Exchange Commission (SEC).
Bitcoin broke and closed above $100,000 a few hours after Trump announced Paul Atkins, a well-known crypto fan, as the next Chair of the SEC. While making the announcement on his Truth Social account on Wednesday evening, the President-elect described Atkins as someone who ‘understands digital assets and their potential to make America great again.’
It is worth highlighting that last week, Trump selected another pro-crypto figure, Scott Bessent, to be part of his incoming administration. If approved by Congress, Bessent will be the next US Secretary of Treasury.
While thanking Trump for the nomination, Bessent said he was ready to support the President’s plans for a Bitcoin reserve, in which one million BTC will be purchased over five years.
Along with Bessent and Atkins, Trump picked Howard Lutnik as the next head of the Commerce Department. Lutnik is currently the CEO of Cantor Fitzgerald, a company that manages the reserves of the USDT stablecoin.
Although the latest rally is primarily driven by Atkins’ nomination, several other factors have fueled Bitcoin’s surge this year. They include:
The 4-Year Bitcoin Halving Cycle
BTC’s total coin supply is capped at 21 million. As of December 2024, more than 90% of that supply is in circulation, with the remaining coins expected to enter the market via mining. According to Bitcoin’s whitepaper, the last coin will be mined in 2140.
Entities that engage in Bitcoin mining are rewarded with BTC for their contribution. The rewards, however, are halved every four years in an event known as the halving. The first halving happened in 2012 when mining rewards were reduced to 25 BTC. In 2024, the fourth halving occurred, and the rewards diminished to 3.125 BTC.
But why are halving events necessary? According to Bitcoin founder Satoshi Nakamoto, they help reduce the rate at which new coins enter the circulating supply in an effort to create scarcity. The idea is that when Bitcoin is scarce, and the demand remains constant or increases, then its price will surge.
This isn’t far from the truth based on historical data, which shows that Bitcoin has rallied significantly a few months after halving. For example, the coin surged 423% a year after the 2020 halving. This year, it has risen 30% since the halving event in April, and many analysts expect more gains in 2025. That said, it is safe to partly attribute the ongoing Bitcoin rally to halving.
Rising Institutional Interest Following ETF Approval
Previous bull runs have been fueled primarily by retail investors. However, the current one is different, considering the crypto space has attracted Wall Street giants like Bitwise, VanEck, and BlackRock.
These institutional giants launched Bitcoin exchange-traded funds (ETFs) earlier this year, making BTC an appealing asset to traditional investors who were previously sitting on the fence.
The ETF issuers have pumped billions of dollars into the Bitcoin market, thus pushing the coin’s price higher. According to Bloomberg ETF guru Eric Balchunas, the issuers have collectively bought 1.1 million Bitcoin worth over $100 billion since January 10, when the ETFs got approved by the Securities and Exchange Commission.
Macroeconomic Factors Favor Bitcoin
BTC has seen significant gains since October, when the US Federal Reserve abandoned its hawkish monetary policies for a dovish approach to tackle inflation. The Central Bank has been lowering the interest rate, making borrowing more affordable.
Typically, when interest rates are lowered, investors find traditional investments like bonds unattractive. Therefore, they seek alternatives, with Bitcoin being a top choice.
That said, BTC could attract more investors later this month as the Federal Reserve is expected to reduce the rates by 25 basis points on December 18.
