The world’s first decentralized digital currency, which reached an all-time high this month by breaking the $100,000 barrier to a record $107,000, shows Bitcoin’s movement from a niche financial asset to a mainstream investment now attracting the interest of governments, financial institutions, and investors worldwide.

Boaz Sobrado, a financial technology analyst based in London, brought attention to the shift: “Bitcoin has moved from being a tool for dissidents and illicit transactions to an asset central banks must consider seriously.”

Governments Join the Bitcoin Bandwagon

Several governments have also started stockpiling Bitcoin, either through strategic reserves or through seizures of the asset. All told, the United States alone has seized more than 215,000 Bitcoins, currently valued at close to $21 billion, from criminal probes since 2020, according to crypto analytics firm 21.co. El Salvador, which became the first nation to adopt Bitcoin as legal tender, has built up $600 million in reserves.

Source: X

The approach of El Salvador has inspired other nations, though not without challenges. As part of a $1.4 billion loan agreement with the International Monetary Fund, the nation recently agreed to privatize its national cryptocurrency wallet, Chivo, and make the adoption of Bitcoin by businesses voluntary.

Bitcoin ETFs and Institutional Support

The U.S. Securities and Exchange Commission approved Bitcoin ETFs, which give investors indirect exposure via traditional stock exchanges. In its October report, the U.S. Department of the Treasury referred to Bitcoin as “digital gold” due to its utility as a store of value.

Even Wall Street has warmed up. Larry Fink, of BlackRock, once labeled Bitcoin an “index of money laundering” but likens the cryptocurrency to gold. “Bitcoin is an asset class that protects you,” he said earlier this year.

The recent rally in this cryptocurrency has been inspired by the election of President-elect Donald Trump, who had promised to turn the U.S. into a “crypto capital.” Trump’s presidency boasts a number of influential crypto proponents, including crypto czar David Sacks and Paul Atkins as chair of the SEC. Senator Cynthia Lummis, a Republican from Wyoming, has even presented the Bitcoin Act of 2024, which aims to add Bitcoin to national reserves along with gold and oil.

“If we allocated just five percent of all Bitcoin, we could cut our national debt in half within two decades,” Lummis said in an interview with Fox Business.

Bitcoin’s Core Value Proposition

Bitcoin’s capped supply of 21 million coins remains one of its most compelling features. Unlike fiat currencies, which central banks can print at will, Bitcoin’s finite supply ensures scarcity. “Every four years, Bitcoin’s supply is halved, driving up demand and value,” explained Armando Pantoja, a futurist and tech investor.

Max Keiser, senior Bitcoin adviser to El Salvador’s President Nayib Bukele, emphasized the revolutionary aspect: “Bitcoin separates money from the state. This is the first time in history that money exists without central authority control.” Keiser predicts Bitcoin’s price could hit $1 million within the next few years, achieving a market cap comparable to gold’s $20 trillion valuation.

Bitcoin (BTC) price chart. Source: Bitcoin Liquid Index (BLX) via Brave New Coin

Despite its meteoric rise, Bitcoin’s volatility remains a concern. After hitting $107,000 earlier this week, the price fell to $97,000 by Friday. Critics, including Euro Pacific Capital’s Peter Schiff, warn that Bitcoin could exacerbate economic instability. “Bitcoin misallocates resources, leading to trade deficits and a weaker dollar,” Schiff argued on social media.

Will CBDCs Compete with Bitcoin’s Growth?

Amid Bitcoin’s surge, some governments are increasingly pondering central bank digital currencies as a controlled alternative. Gerald Celente, the founder of the Trends Research Institute, said the US might use such CBDCs to pay off their 36 trillion dollars in national debt. “Central banks are moving to digitized currencies in order to regain control of monetary systems,” Celente said.

As Bitcoin continues to gain further legitimacy, it automatically claims a greater place within the global financial ecosystem. Whether as a revolutionary technology or a speculative asset, Bitcoin’s journey from obscurity to mainstream prominence is one of the pivotal chapters in financial history.