Bitcoin’s Rise to $100,000 Signals Global Adoption Shift

~~Frank Holmes, U.S. Global Investors

Just a few short years (months?) ago, few would have believed it possible. But it happened: Bitcoin has traded above $100,000 for the first time ever.

Global adoption of the world’s largest digital asset by market cap is getting harder to ignore. We’re no longer talking about magic internet money favored by tech enthusiasts. We’re talking about a serious financial asset that central banks, corporations and even national governments are now paying close attention to.

Consider the most recent developments: President Nayib Bukele’s El Salvador, the first nation to adopt Bitcoin as legal tender in 2021, has reported more than $333 million in Bitcoin profits.

And here in the U.S., everyone’s talking about the incoming Trump administration’s plans to establish its own strategic Bitcoin reserve.

More Than Digital Gold

Part of Bitcoin’s allure is that it shares many characteristics with gold. This week, Federal Reserve Chairman Jerome Powell said he believes Bitcoin is a competitor to gold rather than the U.S. dollar.

“It’s just like gold, only it’s virtual, it’s digital,” Powell told the audience at the New York Times’s DealBook Summit.

I believe this comparison says a lot. Gold has been a trusted store of value for thousands of years, prized for its scarcity and global liquidity. Central banks just reported buying 60 metric tons of the precious metal in October, the most in a single month this year.

October Marked 2024's Highest Monthly Central Bank in Gold Buying

Bitcoin shares these attributes in a modern, digital form. Unlike fiat currencies, there’s a fixed supply of Bitcoin, capped at 21 million coins. That scarcity, combined with growing trust and acceptance, has helped it ascend to this six-figure milestone.

For the record, I don’t believe gold is going anywhere. It’s been around for over 5,000 years and is deeply ingrained in global commerce and traditions. Gold trades over $160 billion every day, second only to the S&P 500, according to the World Gold Council (WGC). Plus, unlike Bitcoin, gold has many practical use cases, from jewelry to electronics.

But Bitcoin is carving out its own path, proving it can also serve as a store of value in turbulent times. The chart below shows the Bitcoin-to-gold ratio, which tells you how many ounces of gold it takes to buy one Bitcoin. This week, the ratio surpassed 38, a new all-time high.

Bitcoin Priced in Gold at an All-Time High as the Digital Asset Exceeds $100,000

Political Winds Shifting in Bitcoin’s Favor

It’s not just Wall Street that is warming to Bitcoin. The political climate appears to be shifting as well.

President-elect Donald Trump—a former crypto skeptic turned fan—recently nominated Paul Atkins, a conservative and crypto-friendly lawyer, to replace Gary Gensler as the head of the Securities and Exchange Commission (SEC). During his tenure at the SEC from 2002 to 2008, Atkins fought for balanced, innovation-friendly policies. His return could pave the way for more regulatory clarity, attracting even more institutional capital into the crypto space.

Trump also just named billionaire venture capitalist David Sacks as his “AI and crypto czar.” Sacks, a member of the so-called PayPal Mafia, is another strong advocate for clear regulations in cryptocurrency and artificial intelligence. His leadership, I believe, could help position the U.S. as a global leader in emerging technologies, including Bitcoin, blockchain and AI.

And on Capitol Hill, Senator Cynthia Lummis of Wyoming, a longtime Bitcoin advocate, has proposed the BITCOIN Act, which, if passed, would lead to the creation of a U.S. strategic Bitcoin reserve. Just as the Strategic Petroleum Reserve (SPR) ensures a steady supply of oil in times of emergency, a Bitcoin reserve could serve as a digital financial backstop, a buffer against economic shocks and runaway inflation.

Analysts’ Forecasts Turn (Even More) Bullish

Major financial institutions and research firms aren’t sitting idle. Bernstein Private Wealth Management projects Bitcoin could reach $200,000 by late 2025, a forecast echoed by Standard Chartered.

One of the key drivers of these higher forecasts is the inflow of institutional money. Big investors—corporations, pension funds, endowments—are starting to treat Bitcoin as a legitimate part of a diversified portfolio. According to analysts, if U.S. retirement funds or a proposed U.S. strategic Bitcoin reserve started accumulating even a small percentage of their assets in Bitcoin, demand could skyrocket.

MicroStrategy, a publicly traded company, has shown leadership in this area. Its aggressive three-year Bitcoin purchasing plan has already exceeded expectations. Its strategy? Treat Bitcoin like a corporate treasury reserve asset.

Allocate Responsibly

So, what does all this mean for investors?

First, it means that Bitcoin is no longer a fringe phenomenon. At over $100,000 per coin, it’s a force to be reckoned with, attracting serious interest from global institutions and governments.

That said, investing in Bitcoin should still be approached thoughtfully. Volatility remains high. While gold typically moves at a measured pace, Bitcoin’s price can swing more dramatically. Proper allocation could provide exposure to Bitcoin’s growth potential without taking on excessive risk.

As regulators become more crypto-friendly, and as the U.S. government considers strategic reserves, Bitcoin’s credibility and staying power have only grown. This isn’t to say Bitcoin will replace gold overnight or that it comes without risks. But after crossing the psychologically important $100,000 mark, it’s clear that the world’s largest cryptocurrency is maturing into a bona fide financial instrument worthy of consideration.

~~Frank Holmes, U.S. Global Investors

Just a few short years (months?) ago, few would have believed it possible. But it happened: Bitcoin has traded above $100,000 for the first time ever.

Consider the most recent developments: President Nayib Bukele’s El Salvador, the first nation to adopt Bitcoin as legal tender in 2021, has reported more than $333 million in Bitcoin profits.

And here in the U.S., everyone’s talking about the incoming Trump administration’s plans to establish its own strategic Bitcoin reserve.

More Than Digital Gold

“It’s just like gold, only it’s virtual, it’s digital,” Powell told the audience at the New York Times’s DealBook Summit.

Political Winds Shifting in Bitcoin’s Favor

It’s not just Wall Street that is warming to Bitcoin. The political climate appears to be shifting as well.

Analysts’ Forecasts Turn (Even More) Bullish

Major financial institutions and research firms aren’t sitting idle. Bernstein Private Wealth Management projects Bitcoin could reach $200,000 by late 2025, a forecast echoed by Standard Chartered.

Allocate Responsibly

So, what does all this mean for investors?

First, it means that Bitcoin is no longer a fringe phenomenon. At over $100,000 per coin, it’s a force to be reckoned with, attracting serious interest from global institutions and governments.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

As you can expect, any grandiose plan would get all kinds of blowback… but this year exhibited all manner of Trump Derangement Syndrome on top of the difficulty of steering a sclerotic empire clear of the rocky shores.

The “phases” were never about optimism or pessimism. They were about sequencing — how stress surfaces, how systems adapt, and what must hold before confidence can regenerate. And in the end, what do we do with our money?!

Relative to GDP, the net international investment claim on the U.S. economy was 20% in 2003. It had swollen to 65% by 2023. Practically every type of American company, bond, or real estate asset now has some degree of foreign ownership.

But it’s even worse than that. As the federal deficit has pumped up the GDP figures, and made a larger share of the economy dependent on government spending, the quality and sustainability of GDP have deteriorated. So, foreigners, to the extent they are paying attention, are accumulating claims on an economy that has been eroded by inefficient, government-directed spending and “investments.” Why should foreign creditors maintain confidence in the integrity of these paper claims? Only to the extent that their economies are even worse off. And in the case of China, that’s probably true.

As global government interest expense climbed, gold quietly followed it higher. The IIF estimates that interest costs on government debt now run at nearly $4.9 trillion annually. Over the same span, gold prices have tracked that burden almost one-for-one.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

Over that same period, gold prices have surged about 135%, while silver is up roughly 175%. Zoom out two years, and the divergence becomes starker still: gold up 114%, silver up 178%, while the S&P 500 gained 44%.

According to the American Association of Individual Investors, the average retail investor has about a 70% allocation to stocks. That’s well over the traditional 60/40 split between stocks and bonds. Even a 60/40 allocation ignores real estate, gold, collectibles, and private assets.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.