Bitcoin Finally Really Did Reach a New All-Time High

Several months ago spot Bitcoin ETFs were approved and the Bitcoin halving reduced the block reward to 3.125 BTC per block. Between those two events, much hype was made about Bitcoin achieving a new all-time high. In the previous Insights article Bitcoin Did Not Reach a New All-Time High Before the 4th Halving, I demonstrated that Bitcoin actually did not achieve a new all-time high before the halving due to inflation. Subsequently, Bitcoin's price declined to below $50,000 and fluctuated in a range between $50,000 and $70,000 for months.

During and after the election last week, Bitcoin's price soared, passing the high price from earlier in the year. The question was, based on inflation over the past few years until now, did Bitcoin finally actually achieve a new all-time high? Well, that question has assuredly been answered in the positive since Bitcoin's price has continued to climb and, at the time of writing, Bitcoin is now over $90,000. Still, with today's CPI report, let's see just when Bitcoin achieved a new all-time high beyond the November 2021 high. 

During 2021, the US economy began experiencing rising high inflation. Inflation rose until June 2021, reaching 9.1% according to the headline inflation rate as measured by the Consumer Price Index (CPI). Inflation continues to remain above the Federal Reserve's target of 2%, with today's CPI inflation report coming in at 2.6%.

To calculate the new all-time high barrier from April 2021's all-time high we'll use the following data:

• In April 2021, Bitcoin reached a new all-time high of about $64,900 (CPI).
• In April 2022, the year-over-year inflation rate was 8.3% (CPI).
• In April 2023, the year-over-year inflation rate was 4.9% (CPI).
• In April 2024, the year-over-year inflation rate was 3.4% (CPI).
• We have additional inflation data between April 2024 and today. Here are the month-over-month inflation reports:
• May 2024: 0%
• June 2024 -0.1%
• July 2024 0.2%
• August 2024: 0.2%
• September 2024: 0.2%
• October 2024: 0.2%
• November 2024: 0.2% 

To calculate what Bitcoin's April 2021 all-time high would be in today's dollars we simply multiply:

$64,900 * 1.083 * 1.049 * 1.034 * 1.009 = $76,924

Using April 2021's all-time high, Bitcoin's value would have needed to exceed $76,924 to reach a new all-time high. It missed that mark in March by over $3,100. Bitcoin did finally briefly pass $77,000 last Friday ( November 8th), and finally soared past it the following day (Saturday, November 9th).

To calculate the new all-time high barrier from November 2021's all-time high we'll use the following data:

• In November 2021, Bitcoin reached a new all-time high of about $69,000.
• In November 2022, the year-over-year inflation rate was 7.1% (CPI).
• In November 2023, the year-over-year inflation rate was 3.1% (CPI).
• In November 2024, the year-over-year inflation rate was 2.6% (CPI).

To calculate what Bitcoin's November 2021 all-time high would be in today's dollars we simply multiply:

$69,000 * 1.071 * 1.031 * 1.026 = $78,171

Using November 2021's all-time high, Bitcoin's value would have needed to exceed $78,171 to reach a new all-time high. It missed that mark in March by almost $4,400. Bitcoin did finally achieve a new all-time high last Saturday (November 9th).

Bitcoin's new all-time high at the time of writing is $93,,400. There's no way to predict how high the price of Bitcoin will go at any time. Like any other asset or investment, it's impossible to predict the future and guarantees cannot be made. Bitcoin is a different asset class than other investments, and its valuation is determined very differently.

There currently appears to be a lot of tailwind for Bitcoin, including a potentially easing regulatory environment under the new government, increasing institutional adoption, adoption of Bitcoin in corporate treasuries, and the U.S. government potentially adopting Bitcoin as a reserve asset. None of those are guaranteed, but any one of them actually happening could have a positive effect on Bitcoin's price. Other unforeseen events could have a negative effect on Bitcoin's price, including economic events, regulatory events, and more. It's always good to invest with your goals and risk tolerance in mind.

All that can be said with any certainty is that if you believe Bitcoin is a good investment for yourself and your financial plan, then you should be allocating to it according to your financial plan and your investment policy statement. If you don't have a financial plan or an investment policy statement, then Escient Financial can help you with both so that you can get the right investment strategy to achieve your goals, whether or not that strategy includes Bitcoin or any other cryptocurrency or digital asset.