Why have cryptocurrencies risen? Why has Bitcoin reached a record high?

Since its inception in 2009, the value of Bitcoin has fluctuated—sometimes dramatically—as public awareness and interest in digital currencies have evolved.

Over the past decade, Bitcoin has experienced extreme volatility, with its value soaring and then plunging. In 2017, the price of Bitcoin surged from around $1,000 in January to nearly $20,000 in December. In 2018, however, its price plummeted below $4,000. In 2020, Bitcoin’s price fluctuated sharply again, rising from $7,000 to over $28,000 by the end of the year. This upward momentum continued into 2021, peaking at $69,000 in November.

Then, in 2022, Bitcoin and other cryptocurrencies such as Ethereum saw steep declines during a period referred to as the "crypto winter." By the end of that year, Bitcoin had fallen below $20,000. However, 2023 brought a turnaround, with Bitcoin closing the year at just over $42,000.

2024: A Milestone Year for Bitcoin

The year 2024 marked a significant turning point for Bitcoin, with several key events driving its price to new highs. In January, the U.S. Securities and Exchange Commission (SEC) approved cryptocurrency exchange-traded funds (ETFs), including spot Bitcoin ETFs. By March, Bitcoin was trading at around $70,000. The Bitcoin halving event in April 2024 also renewed public interest and contributed to its rising value.

By October 2024, ahead of the U.S. presidential election, Bitcoin's valuation hovered around $68,000. After the election, Bitcoin entered a bull market, setting new records almost daily. On November 13, 2024, Bitcoin reached an all-time high of over $90,000, with a market capitalization of approximately $1.8 trillion.

Why Did Bitcoin Surge?

The spike in Bitcoin's value in November 2024 can be attributed to several factors, each playing a critical role in driving the cryptocurrency to new heights.

However, the single biggest driver was President Donald Trump’s victory in the U.S. election on November 4. His win was a key catalyst for Bitcoin’s price surge.

During his campaign, Trump pledged at a Bitcoin conference in Nashville, Tennessee, to make the United States the "global cryptocurrency capital." At the same event, he also promised to appoint a crypto-friendly SEC chairman if elected.

The Trump administration’s vision included reducing restrictions on cryptocurrency and implementing more favorable policies to support its use and adoption.

To solidify these pro-crypto policies, Trump proposed establishing a presidential advisory committee on Bitcoin and cryptocurrency. This committee would consist of individuals supportive of digital assets. Trump also vowed to prevent the Federal Reserve from creating its own central bank digital currency (CBDC).

Trump’s pro-crypto stance and rhetoric reinvigorated investor confidence in Bitcoin. His victory also triggered a broader rally in the U.S. stock market in the days following the election.

Steady ETF Inflows

In addition to other factors, Trump’s win gave Bitcoin an extra boost.

In January 2024, the SEC approved the first-ever spot Bitcoin ETFs. Trump’s victory made these ETFs more attractive, drawing significant inflows from new investors.

On November 11 and 12, Bitcoin ETFs saw the largest inflows since their approval in January 2024. In just those two days, about $2 billion flowed into Bitcoin ETFs.

BlackRock’s iShares Bitcoin Trust was one of the largest beneficiaries, with over $40 billion in inflows since its inception—more than any other ETF launched in the past decade.

Deregulation

Under a Trump administration, the tech industry is expected to face less regulation overall.

The prospect of deregulation has already had a notable impact on Bitcoin’s price in November. The anticipation of a lighter regulatory touch under Trump helped push Bitcoin above $90,000, reflecting market optimism about a more favorable crypto regulatory environment.

As part of his campaign platform, Trump indicated plans to reduce oversight of the crypto industry. Reduced regulation could open up more opportunities for digital assets by lifting restrictions.

Trump’s specific regulatory pledges include:

• Firing SEC Chairman Gary Gensler, who has led enforcement actions against the crypto industry.

• Establishing a strategic national Bitcoin reserve.

• Making the U.S. the “crypto capital of the Earth.”

• Appointing crypto-friendly financial regulators.

Lower Taxes

Another key element of Trump’s agenda is tax policy, which has helped push Bitcoin to record highs.

Several proposed tax reforms could make crypto investments more appealing. These include:

• Lowering capital gains tax rates: Trump proposed reducing the top capital gains tax rate, allowing investors to retain a larger share of profits from crypto trading.

• Tax-free crypto transactions: Trump’s plan includes discussions to eliminate capital gains taxes on domestic cryptocurrencies (particularly Bitcoin and XRP), while foreign-based assets like Ethereum would remain taxable.

Increased Retail Participation

In Bitcoin’s early days, retail investors had limited access. Today, the situation has changed dramatically. As more individuals embrace digital assets, the user base for Bitcoin and other cryptocurrencies has grown, boosting demand and price.

Retail investors now have multiple ways to participate in the crypto market:

• Crypto exchanges: Platforms like Coinbase are attracting more retail traders.

• Crypto ETFs: Retail investors can now easily gain exposure to Bitcoin through ETFs—a convenience that didn’t exist before 2024.

Impact on Other Cryptocurrencies

Bitcoin isn’t the only digital asset seeing gains. Ethereum, Solana, and even Dogecoin have also surged significantly.

Here’s a snapshot of some gains:

The Future of Cryptocurrency

Despite some uncertainties, the overall outlook for cryptocurrency remains optimistic.

Trump’s crypto agenda—which includes creating a national Bitcoin reserve, supporting U.S.-based mining, and opposing central bank digital currencies—may boost the market further. His pledge to make the U.S. the global "crypto capital" could attract global innovators and investors.

While short-term market reactions have been overwhelmingly positive, with major gains in Bitcoin and other cryptocurrencies, the long-term impact will depend on the actual implementation of these policies and broader economic conditions. The timeline for enacting Trump’s policies remains unclear.

Though the U.S. is a key player, the global regulatory landscape for cryptocurrencies continues to evolve, which could influence the U.S. market regardless of domestic policies.