The price of bitcoin reached US$68,420 as of 18 October, up 13.5% since 10 October and 54.8% since the beginning of the year. The surge began after the US Securities and Exchange Commission (SEC) gave approval for eleven bitcoin exchange-traded funds to track the cryptocurrency in January, allowing many new investors to enter the crypto market. Last week the SEC went further by granting ‘accelerated approval’ for the funds to list and trade options tied to spot bitcoin prices on the NYSE. The 50-basis-point cut in US interest rates last month has also played its part in bolstering the attractiveness of assets with no associated cashflow, such as cryptocurrencies. Meanwhile, there has been a change in tone by the US presidential candidates on cryptocurrencies, with Donald Trump – who previously called bitcoin a ‘scam’ — now openly supporting bitcoin-mining in the US, promising to reduce cryptocurrency regulations and even suggesting creating a BTC reserve to pay off national debt. By contrast Kamala Harris has generally aligned with the Biden administration’s cautious attitude towards cryptocurrencies, but after the SEC’s move in January, the Democrat candidate has made efforts to build relationships with big players in the US crypto industry. The US election on November 5 may therefore decide whether bitcoin’s price will continue to grow. While it is possible to identify short-term factors that affect the price of BTC, on a longer-term view, and in a strict sense, BTC remains fundamentally worthless, in common with other cryptocurrencies. Nevertheless, many people have assigned great value to those assets, and for a sustained period of time. As we set out in 2021 in ‘A tale of two cryptos’[1], even on a more generous view, BTC appeared significantly overvalued then, and continues to do so now.
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