Here's Why Bitcoin Is a Thing Again, and Where It's Headed

Bitcoin is either the cockroach or Superman of cryptocurrencies, depending on how you view the coin. At its peak, a single Bitcoin was worth over $67,000. Last year, it plummeted, bringing investors' hopes along with it. But once again, Bitcoin appears to be making a wallet-bending recovery.

In short, the market thinks Bitcoin is a thing again. The proof: The coin is up 158% since the beginning of 2023, outperforming the stock market by miles. The reason: a combination of court rulings, hedging, and anticipation of a wave of spot Bitcoin ETFs.

Bitcoin as an economic hedge

In the week following the collapse of Silicon Valley Bank (SVB), Bitcoin's price rose 25% and held. To some, that's a green flag for Bitcoin long term. It means Bitcoin could work like gold, gaining in value when it feels as if the usual systems are falling apart.

To many, investing some cash in Bitcoin feels safer than putting all their money in alternatives. At the very least, it could be profitable.

It's fair to say financial futures in the U.S. feel uncertain. Credit card debt is rising. Inflation remains a sticky issue in certain parts of the economy, like groceries. Mortgage rates are up even as home values are dropping, according to real estate brokerage Redfin. Even some folks who bought a home at a 2.75% rate regret their purchase, for good reason.

Regular Americans feel crushed between high sticker prices and expensive loans -- what if things get worse before they get better? How can you hedge against the status quo, without losing everything to bad governance?

The price of Bitcoin is up over 100% since the collapse of SVB at time of publication.

Spot Bitcoin ETFs

Canada approved the world's first spot Bitcoin ETF in 2021. The U.S. has been slower on the uptake. Basically, a U.S. court had to force the SEC to review applications for approval. One of the applicants: Blackrock, the world's biggest asset manager. Fidelity has also applied.

In short, the dragons of old-school finance have come to play.

A spot Bitcoin ETF is a big deal, in theory. It would let companies join individuals in the Bitcoin HODLing frenzy. The price of Bitcoin could multiply -- ARK Invest speculates Bitcoin could reach a value of $682,800 per coin by 2030, in part because of companies buying shares of spot Bitcoin ETFs.

2030 is a long way off, and claiming an asset will end up being worth 10 times more is a bold claim, to put it mildly. But Bitcoin only needs to regain its all-time high to make many holders and speculators happy.

Where Bitcoin is headed

Bitcoin has traditionally taken a cue from the U.S. stock market in that over the long term, the price goes up. Coinbase and Robinhood have earned millions helping people buy Bitcoin and hold it. Even Fidelity, an extremely popular asset manager, has filed for a spot Bitcoin ETF. In other words, a lot of institutions are betting on the coin being more than a long-term flop.

The soonest deadline for the SEC to approve, deny, or delay a spot Bitcoin ETF decision is Jan. 10, 2024. Whatever decision the SEC makes will probably impact the coin's price.

Nobody knows where Bitcoin will head next, kind of like how nobody knows where the stock market will go, or precisely how the federal funds rate will move. Buying on speculation is a gamble, plain and simple. But it's worth noting why people are getting excited over Bitcoin all over again.

So yeah, Bitcoin is a thing again

Bitcoin is a thing again because it's had a good year, it's been spiking recently, and there is good reason to believe it will continue to appreciate into next year.

Some might argue that Bitcoin was never not a thing, despite the collapse in price. And they'd have a point. The number of long-term Bitcoin holders continues to tick upward, creating a sturdy bottom for Bitcoin to bounce back from.

That's not to say that anyone should buy Bitcoin. There are good reasons not to -- for one thing, it's volatile. For another, the SEC could crush ETF hopes. But this should give you reasons why your friends and family members might be talking about the coin again.

At the very least, the biggest digital currency by market cap is being taken seriously by the U.S. government, major asset managers like Blackrock, and regular Americans.