NEW YORK: Once dismissed as fanatics, the Bitcoin bulls must be feeling vindicated. They made an accurate call on the cryptocurrency’s potential for gains – witness the staggering rally under way – and were right, at least in part, for the right reasons.
It is extremely unusual for a bubble to burst and then recover to reach new heights so quickly, and suggests that something real and sustainable is going on. Since the low point in late 2022, its price is up around 300 per cent, more than all but one of the other top 10 cryptos. Moreover, it is growing fast from a much larger base: With a market cap of more than US$1.3 trillion, Bitcoin is now three times larger than its closest competitor . Of the 100 largest cryptos, five are at or near all-time highs – Bitcoin and four others that are specks in comparison.
Gold has been more than holding its own, trading at all-time highs and far above its fair value based on inflation expectations. To diversify away from the dollar, central banks worldwide are buying gold, not Bitcoin, at a record pace. Bitcoin accounts for less than 10 per cent of the transactions in cryptocurrencies worldwide. Some 70 per cent of Bitcoin accounts have been dormant for a year, suggesting people are buying the currency to hold as an investment, not to use for purchases at Starbucks.
In January, following approval by the United States Securities and Exchange Commission, 11 of them opened new bitcoin exchange-traded funds to the general public, and that market is on course to grow from US$50 billion now to US$300 billion in 2025.