Bitcoin was created in 2009, by a pseudonymous creator, Satoshi Nakamoto and is the world’s first cryptocurrency. Cryptocurrencies are digital tokens that use technology to facilitate instant payments without the need of a third party. From the beginning, the Bitcoin supply was capped by Nakamoto. The maximum number of coins stipulated to be in existence was 21 million. As of Nov. 12, 2023, there were 19.53 million Bitcoins in existence with 1.46 million left to be mined. However, experts believe that it will take until the year 2140 before the supply cap of 21 million is reached.

In 2009, Bitcoin started trading at a price of $0.00099 per coin. On December 12, 2023, Bitcoin was trading at a price in excess of $41,000 per coin. 2023 has been a surprisingly good year for Bitcoin. Since January 1, 2023, Bitcoin has increased by 164%. It has outpaced traditional assets, including gold which has risen 10% and the S&P 500 which has gained 20%. Additionally, according to CoinGecko data, Bitcoin has increased its share of the total crypto currency market by more than 50%. 

​​What is fueling this rally by Bitcoin? One of the most important factors is signs that major investment firms are set to get regulatory approval to offer spot bitcoin exchange traded funds (ETF)— a pooled investment security that can be bought and sold like stocks. Federal regulators are expected to give the “go ahead” for several bitcoin ETFs as early as January 2024. Yiannis Giokas is a senior product director at Moody’s Corporation, an American business and financial services company. According to Giokas, the green light from federal regulators for Bitcoin ETF’s  could make investing in crypto more accessible to investors. In an interview with MoneyWatch, Giokas states, "As more and more managers venture into the bitcoin spot ETF space, more retail and institutional investors, even the more conservative ones, will feel a higher degree of comfort investing in this space." Asset management giants like BlackRock and Fidelity are among the 13 companies that have submitted applications to the U.S. Securities and Exchange Commission for the multi-billion dollar product.

Another important factor is the growing assumption that the Federal Reserve is done hiking its benchmark interest rate and that inflation is receding. When interest rates fall, investors are more likely to pour money into riskier investments such as crypto. Greg Magadini, Director of Derivatives at the crypto data firm, Amberdata, told CBS MoneyWatch, “Lower rates are bullish for Bitcoin.” 

So what is in store for Bitcoin in 2024? In April 2024, Bitcoin will undergo what is known as halving. This is an event where the rewards for mining Bitcoin transactions are cut in half. This event occurs about every 4 years and cuts the rate at which new Bitcoin supplies enter the market. Past havings have led to huge rallies for Bitcoin, and another massive rally is predicted for 2024. It is important to remember that past performance is no guarantee of future performance. According to the Motley Fool, Bitcoin investors are setting their sights on the $1 Trillion mark. However, they also recommend that investors should not buy Bitcoin unless they plan on holding it for the next 5 to 10 years. Bitcoin is a “long term investment and should be treated as such.” 

Tickers to consider: IKT

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