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Bitcoin True Believers Bask in I-Told-You-So Glow at $100,000
(Bloomberg) -- Anthony Scaramucci, the hedge-fund manager hired and fired by Donald Trump in his first term as president, jokes that he owes his ex-boss a token of thanks.
“I probably have to buy Donald Trump a Christmas gift,” he quipped, when asked about the runup in the price of Bitcoin following the re-election of a man he once called a friend but now considers a danger to the country. “Like a gift card to McDonald’s.”
Like many of the investors who stuck with cryptocurrency through its ups and downs, its scandals and scams, Scaramucci is basking in an I-told-you-so glow today.
“Bitcoin at $100,000? I feel validated,” the founder of SkyBridge Capital said in a recent interview as the milestone level approached.
The six-figure price reached Wednesday by the original cryptocurrency represents not only a 199,999,900% gain from the 5 cents it fetched 15 years ago — it’s also acceptance, for everyone who kept the faith. No longer is this enigmatic internet money considered by polite society little more than a plaything of outsiders and outlaws. With the embrace of the next president and some $108 billion directly tracking the digital asset in exchange-traded funds, Bitcoin has crossed the chasm into something resembling legitimacy.
“We are witnessing a paradigm shift,” said Mike Novogratz, founder and CEO of Galaxy. “After four years of political purgatory, Bitcoin and the entire digital-asset ecosystem are on the brink of entering the financial mainstream.”
Novogratz is among the industry heavyweights who have long predicted Bitcoin would go above $100,000, however loudly naysayers insisted it was backed by nothing but hype. The reputation of the industry that it spawned dropped to a new low barely two years ago when Sam Bankman-Fried’s FTX empire collapsed in a pile of fraud, one of several bankruptcies in the industry amid a bear market bad enough to be called the latest “crypto winter.”
Many, even those within the industry, lost confidence in the asset and doubted it would make a comeback. Yet even as major players collapsed, Bitcoin kept on functioning just as it was designed to, and its price clawed back losses until it broke out to a new all-time high this March. The rally was just getting started. At a high on Thursday above $104,000, it’s up about 145% year to date, making it one of the best performing assets on Wall Street.
“I have to say, after the FTX thing, when people were like, ‘OK, that’s it. It’s really done this time,’ I was like, ‘What are you talking about? Some loser just committed regular old-fashioned fraud. What does that have to do with Bitcoin?’” said Don Wilson, founder of Chicago-based trading giant DRW, which has a crypto subsidiary DRW Cumberland.
The launch of spot-Bitcoin ETFs in the US by major players like BlackRock Inc. and Fidelity marked a turning point in institutional acceptance, ushering in a much broader cohort of buyers. This was followed by an unexpected boost from Trump, whose embrace of Bitcoin during his campaign triggered a more-than 50% bull run from his November election win onward.
While a healthy skepticism toward digital assets lingers in many corners of Wall Street, the persistent returns and resiliency of Bitcoin — not to mention a sudden, drastic reversal in the outlook for regulatory risks in the crypto industry — has made the view costly. Take Charles Schwab Corp.’s incoming chief executive officer, Rick Wurster, who said the firm is looking to offer spot cryptocurrency trading once US regulations make doing so easier, as he expects in the upcoming administration.
“I have not bought crypto, and now I feel silly,” he lamented in an interview on Bloomberg Radio on Nov. 21.
It’s a stark contrast from the previous decade when Bitcoin’s press clippings were mostly crime stories. Today, for better or worse, it looks more and more like a mainstream financial asset, sitting in the accounts of corporations, pensions, hedge funds and even individuals’ retirement nesteggs.
“The significance of Bitcoin’s price breaking through the $100,000 milestone lies in providing the public with a powerful memory point, showing that those unbelievable things are really happening,” Yi He, co-founder of Binance, the world’s largest crypto exchange, said as the $100,000 milestone approached. “The small, persistent efforts accumulated day-by-day over the past decade by members of the crypto community will ultimately converge into this historic scene.”
Yet despite the achievement of the round-number milestone, the celebrations in some corners of the crypto market are surprisingly quiet. The reason? Many view it as just that — a milestone on the road to further gains, not a destination.
“Over the long term, I’m bullish,” Novogratz said. “It won’t be a straight line up, and investors should always consider taking gains off the table. But, with a pro-crypto administration about to take charge in the U.S., it’ll be hard for the rest of the world not to take notice.”