Is Bitcoin back from the dead? A year ago, Bitcoin — and “crypto” in general — was in a parlous state. A series of major scandals, including the FTX collapse, had investors running scared and regulators on a warpath. The Securities and Exchange Commission (SEC) launched numerous full-bore attacks on crypto companies, and even blamed crypto for a short-lived banking crisis last summer. The public perception of digital assets was also in the toilet, and politicians, fearing reputational contagion, wanted nothing to do with them (this was in stark contrast to early 2022, when a third of the US Congress took money from a certain Sam Bankman-Fried).

Critics, not unreasonably, said crypto had failed to offer compelling use-cases, beyond speculation. They said it was a cesspit of money laundering and terrorism (its involvement in the latter tends to be vastly overstated). They said it was dangerous for the environment. They said it could never become part of the financial system, because key financial players on Wall Street would never accept it. Some even dared to bid a valedictory “Sayonara”, as they have hundreds of times before now.

Yet today, Bitcoin is trading at around $70,000, above its previous all-time-high of about $69,000. The world’s premier cryptocurrency now has a market cap greater than silver, and many expect it to reach parity with gold within a few months. Meanwhile, the rest of the crypto market, which slumped along lifelessly for much of 2023, isn’t far behind.

So, what’s going on here? What sparked Bitcoin’s resurrection? The truth is there are five principal reasons behind its revival, the first of which may seem rather obvious…

1. You can’t kill Bitcoin

It’s awfully difficult to eradicate something like Bitcoin. Its network is peer-to-peer and decentralised, with roughly 18,000 public nodes working to validate and maintain the network daily, and they work independently. There isn’t a central point of failure or vulnerability for someone or something to stop. It’s a self-perpetuating system. And, more importantly, Bitcoin has tremendous latent support in the world: there are more than 100 million Bitcoin holders globally and, characteristically, they do not respond to political pressure. Since its emergence 13 years ago, Bitcoin has purred along efficiently, steadily growing, even in the face of massive competition and numerous hacks (particularly to exchanges and individual wallets).

This resilience isn’t directly connected to price; Bitcoin can be resistant without the price going up. But the price is based on this sense of permanence. It’s a function of everyone knowing with certainty that the Bitcoin code can’t be changed and that the issuance of new Bitcoin isn’t a political matter. Unlike fiat currencies, which are subject to central bank issuing more or less of a currency depending on the economic circumstances, the issuance of Bitcoin is predictable. That’s a unique selling point in a world where everything, even money, is increasingly politicised.

2. The arrival of ETFs

Though the Bitcoin industry takes pride in its outsider status, it has long sought mainstream support, whether from regulators or blue-blood institutions. This January, after 10 years of trying, it hit the mother lode, winning SEC approval for Bitcoin exchange-traded funds, or ETFs. These vehicles, which helped to popularise gold in the 2000s, allow everyday investors to buy into Bitcoin as if they were purchasing a conventional stock. There’s no need to own the underlying asset or to store it oneself.

Read more: Unherd.com