Why Bitcoin Soared to New All-Time Highs Today

Key Points

• Bitcoin set a new all-time high on Friday, topping $118,000 per coin for the first time.

• Political pressure on the Federal Reserve to lower rates has boosted crypto prices.

• Leading Bitcoin mining companies are finding ways to stay profitable after last year’s halving.

• 10 stocks we like better than Bitcoin ›

Leading cryptocurrency Bitcoin (CRYPTO: BTC) soared to brand new all-time highs on Friday, reaching new heights for the first time since May 21. The price peaked at $118,856 per coin just before 6 a.m. ET, representing a 4.7% increase from the end of Thursday's stock market hours.

Image source: Getty Images.

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Why Bitcoin is suddenly on a roll (again)

Bitcoin prices have been rising consistently over the last week. The local low point was Monday, July 7, when Bitcoin ended the day at $108,300 per coin. Friday morning's jump works out to a 9.7% increase from that lull.

The price increase looks even stronger over longer time periods. Bitcoin has now gained 42% in three months and 102% over the last year.

It's a complicated situation with many moving parts. The latest halving of Bitcoin's mining rewards took place 15 months ago, giving miners and investors plenty of time to adapt to the changing economic setup. With stable costs on the production side of Bitcoin mining, lower rewards should push the coin price higher in order to keep the transaction validations coming.

At the same time, a lot is happening in the political arena. The Trump administration offered support for the crypto industry, setting up a Strategic Bitcoin Reserve and reviewing regulatory policies in this space. And this week, the White House pressured the Federal Reserve to lower interest rates again -- a move that often lifts Bitcoin prices higher. That effect provided most of this week's Bitcoin fuel, including the strong Friday showing.

Politics, mining, and the survival of the fittest

It remains to be seen whether the Fed will follow through on Trump's rate-cutting demands, but the mere rumor of political pressure can have market-moving effects.

As for the financial effects of last year's halving event, Bitcoin's current prices appear to keep the mining machines in good health. The leading mining companies are boosting their bottom-line results by finding cheaper energy sources. The Bitcoin mining industry has been consolidating into a smaller number of top performers over the years, as expected, given the financial pressure Bitcoin's halving schedule imposes.

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Anders Bylund has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.