Last week, the price of Bitcoin reached $100,000 per coin, an all-time-high as President-elect Donald Trump promises his administration will be crypto-friendly. WSJ’s Alexander Osipovich breaks down the outlook for cryptocurrency. Further Reading: -Bitcoin Hits $100,000, Lifted by Hopes of a Crypto-Friendly Washington -Crypto Players Celebrate SEC Pick, Bitcoin Touches $100,000 Further Listening: -Inside the Trump Crypto Bromance -Coinbase’s CEO on the Future of Crypto Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What milestone did Bitcoin recently reach?
Chapter 2: How did Bitcoin's price history lead to its current value?
Bitcoin is not for the faint of heart. It's very volatile, and periodically it has these massive drawdowns where it loses much of its value. Bitcoin at $20,000.
We got Bitcoin getting a new all-time high. It topped $50,000 a coin. Bitcoin plunged by 22% to below $42,000.
Some key cryptocurrencies like Bitcoin did rebound a bit today, but that's only after months of steady, dramatic losses. So the price of Bitcoin near an all-time high.
What's your favorite Bitcoin milestone?
Well, I quite like the one that was in late 2017 when Bitcoin got nearly to $20,000. So I felt like that was the first time that Bitcoin really broke out into the broad public consciousness and grandma was buying Bitcoin. The ones since then have felt like a season recap or something to me.
Okay. And if grandma bought Bitcoin at $20,000, how's grandma doing today?
Grandma would have gotten about a five-fold return on her investment.
Because last week, crypto hit a major milestone. What happened?
Late in the evening on Wednesday, December 4th, Bitcoin traded above $100,000 for the first time. This was the culmination of a rally that began with the election of Donald Trump. Trump has lately styled himself as a pro-Bitcoin, pro-crypto candidate, promised to appoint people who are crypto-friendly, adopt crypto-friendly policies, and the crypto market has responded to that.
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Chapter 3: What happened to crypto after the FTX collapse?
Welcome to The Journal, our show about money, business, and power. I'm Kate Leinbaugh. It's Wednesday, December 11th. Coming up on the show, what Bitcoin's rally tells us about where crypto is headed next. Just two years ago, the vibe in the crypto world was so bad that it was considered a crypto winter. At that time, cryptocurrencies were plunging. Firms were filing for bankruptcy.
And then the crypto exchange FTX imploded.
That was a low point. Bitcoin fell to around $16,000 per coin then. Many people at that point left crypto for dead and didn't think it was going to come back.
What was the reputation of crypto at that point?
Crypto's reputation took a beating after the collapse of FTX. There was the sense that if somebody who was a fairly well-respected figure in crypto like Sam Bankman Freed turned out to be a crook, then, well, what did that say about the rest of the industry? And regulators, government officials took a very skeptical look at crypto, kind of wanted to hit the brakes on its development.
And for a while, regulators were on the warpath bringing different crypto cases, trying to rein in this wild west of an industry.
And if crypto is the wild west, the sheriff has been the Securities and Exchange Commission. The SEC, which regulates stocks and bonds, has argued that the crypto industry should be regulated like traditional finance. And the SEC has filed lawsuits against some of the biggest players in crypto. Securities and Exchange Commission filing charges against Binance.
The SEC is suing crypto trading platform Coinbase.
And that is just the latest move and a crackdown it appears against crypto companies in general.
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Chapter 4: How are crypto firms responding to regulatory challenges?
In the 2024 election cycle, crypto firms spent big. They funneled tens of millions of dollars into super PACs, backing pro-crypto candidates and trying to get crypto-minded voters to the polls with ads like this. Crypto equals innovation. Innovation equals jobs.
That's why I'm a crypto voter. Don't let anyone else decide your future. Make a plan to vote.
One advocacy group backed by Coinbase called Stand with Crypto gave candidates a rating from A to F based on their support for the crypto industry. As the crypto industry is like, they're like, OK, we need some allies in D.C. What were they looking for? What are their aims?
Chapter 5: What strategies did the crypto industry use to influence politics?
One of the major aims of the crypto industry is was to get a new regulatory framework written for crypto in the US.
Essentially, the crypto industry has lobbied for new rules to be written by Congress that would essentially allow a sort of light, easy to use regulatory framework for crypto companies to offer their coins, offer trading in different digital coins and have it all be blessed by regulators. That is a big item on the crypto wishlist.
And this big election push worked. In the end, according to Stand With Crypto, nearly 300 pro-crypto candidates were elected to Congress. And some lawmakers, seen as hostile to the industry, were voted out. So going into this next administration, the crypto industry is in a pretty good spot.
Yes, the crypto industry is definitely very excited about Donald Trump and the incoming administration.
Coming up, what a Trump White House could mean for crypto. When Trump won the election, the crypto world celebrated by driving up the crypto market.
A cryptocurrency surge that's been gripping Wall Street since President-elect Trump won the election last week. We're talking about cryptocurrency. It's hitting record highs after the election. Bitcoin hit another record high yesterday.
There was a lot of excitement among Bitcoin investors that Trump would be great for crypto, great for Bitcoin, and he's essentially friendly to the crypto industry.
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Chapter 6: What are the crypto industry's aims for regulation?
Trump has even said he'd have the government own a lot of crypto.
One of his pledges has been to create a Bitcoin strategic reserve. The idea is essentially if the U.S. government comes into possession of Bitcoin, for instance, through seizing Bitcoin and some kind of law enforcement action, it wouldn't sell those Bitcoins. Instead, it would hold them and kind of gradually amass this stockpile.
It will be the policy of my administration, United States of America, to keep 100% of all the Bitcoin the U.S. government currently holds or acquires into the future. We'll keep 100%. I hope you do well, please.
The name of this concept, the Strategic Bitcoin Reserve, sounds a lot like the Strategic Petroleum Reserve, which is a giant stash of crude oil that we have that's owned by the government. And if you apply that idea to Bitcoin, it becomes very bullish for the price of Bitcoin because you essentially have a giant holder locking up some of the supply and buying it and not selling it.
Another sign of Trump's support of crypto came last week when he announced his pick for the new head of the SEC, a former SEC commissioner named Paul Atkins.
Paul Atkins is a Republican former regulator who generally has taken the view that the government should stay out of financial markets, be a kind of light-touch regulator, not go too heavy on enforcement actions.
Atkins has been running a consulting company, Potomac Global Partners, whose clients include crypto firms. One of Potomac's clients was FTX.
The general expectation in the industry is that a Paul Atkins-led SEC will be less tough in terms of enforcement and might even drop some of the current lawsuits that are pending against crypto firms.
Here's Atkins on a podcast last year talking about crypto regulation.
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