What Made Bitcoin's Price Surge So High?

In January, the US Securities and Exchange Commission (SEC) boosted bitcoin by approving exchange-traded funds. Bitcoin had already risen to over $40,000 from $16,500

Bitcoin’s price has surged to new highs in 2024, driven by several key factors.

The approval of bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC) in January provided a major boost to the cryptocurrency. In anticipation of the ETFs, bitcoin had already risen to over $40,000 from $16,500 at the start of the year.

However, the price faced some turbulence in the following months. Large wallets selling their holdings dragged bitcoin down to nearly $50,000 in September. But the rally was quickly reignited by Trump's victory in the US presidential election, and the nomination of Paul Atkins, a crypto advocate, to lead the SEC.

With these developments, bitcoin crossed the $100,000 mark in October, and was trading at over $110,000 at the time of publishing this story. The price increase was also driven by institutional investment, with several brokerages adding bitcoin to their portfolios.

As bitcoin's price surged, it also had a positive impact on other crypto tokens. Ethereum's ETH rose 70% since January, and was nearing its 52-week high at $3,863. Ripple's XRP, the fourth-largest with a market cap of $135 billion, rose 3.8x this year. Solana (SOL), the next-biggest with a market cap of $111 billion, rose 2.5x.

In fact, each of the world's top 10 crypto tokens rose 2–4x this year, making 2024 a "bull" year for cryptocurrencies. Many are expecting the trend to continue, especially if the US-fuelled euphoria sustains.

Among critical analysts, US-based Alex Dobvnya told Mint that bitcoin, with a market cap of $2.02 trillion at the time, is now "too big to fail."

However, critics also raise concerns about a potential crash, highlighting that while blockchain has concrete real-world use cases, the same isn't true of tokens, which aren't tied to any physical asset, rendering them volatile.

"Crypto ‘whales’, or wallets with tokens worth over $1 million, can badly impact any token at any time if they are liquidated. In an economic downturn, brokerages may sell, as in 2022, when bitcoin crashed by over 4x in a year. Despite being bigger today, adverse global policy calls (beyond Trump) may also hamper crypto," one critic told Mint.

While Trump's pro-crypto stance could impact some tech policies in India, crypto may not be on the priority list, considering that US exchanges don't have a big presence in India, and the consumer market, too, is limited due to the tax.

This could mean that while bitcoin's price surge may benefit Indian users, the impact is likely to be limited.