How high can the price of Bitcoin (CCC:BTC-USD) go now that the biggest upgrade in more than four years has been made to the cryptocurrency?
It’s been quite a run for the world’s largest digital asset over the past few months.
After falling to a trough of $29,789.90 on July 19, BTC has rallied to its current price of around $60,000.
The surge over the past three months has led many Wall Street analysts to revise up their price targets on Bitcoin to predict that the digital token could now move above $100,000. And all of this excitement was before the highly anticipated “Taproot update” that gives Bitcoin greater transaction privacy and efficiency was completed on Nov. 14.
Taproot is the first upgrade to Bitcoin in four years and cryptocurrency proponents say the change is among the most important in the cryptocurrency’s history as it unlocks the potential for so called “smart contracts” to be executed using Bitcoin’s underlying blockchain.
Smart contracts, which are self-executing agreements that live on a blockchain, can be used for practically any kind of transaction, from paying rent to registering a motor vehicle.
The Taproot upgrade makes smart contracts cheaper and smaller in terms of the space they occupy on the Bitcoin blockchain.
The improved use of smart contracts, say industry experts, could lead to Bitcoin becoming more of a player in the world of decentralized finance (DeFi), a term used to describe financial applications designed to cut out banks and other financial institutions.
DeFi is a space currently dominated by Bitcoin rival Ethereum (CCC-ETH-USD). The improved utility that the Taproot upgrade provides to Bitcoin should improve its functionality, competitiveness and value, which is why the update has won near universal support from cryptocurrency investors.
The last upgrade to Bitcoin in 2017 is referred to online as the “last civil war” because of how contentious it was among cryptocurrency programmers, miners and investors. This is not the case with Taproot.
Bitcoin bulls are hopeful that the Taproot upgrade will be the latest catalyst to send BTC-USD to fresh all-time highs.
Prior to the update, the spark that ignited Bitcoin’s price was its growing widespread acceptance, in particular the approval and launch of the ProShares Bitcoin Strategy ETF (NYSEARCA:BITO) that gives investors exposure to the Bitcoin futures market.
Investors cheered on the news that the U.S. Securities and Exchange Commission (SEC) had approved a Bitcoin-focused exchange traded fund and advocates saw it as definitive proof that cryptocurrencies are gaining mainstream acceptance in the financial world.
There is mounting hope that the SEC will approve other cryptocurrency ETFs in the coming months. The SEC recently signaled, yet again, that it plans to take a prudent and cautious approach to Bitcoin and other digital tokens when it rejected a proposed ETF from VanEck that would have directly tracked Bitcoin’s daily price moves.
In rendering its verdict, the SEC said that VanEck had failed to demonstrate that it could prevent fraudulent trading and protect investors with its proposed Bitcoin ETF.
Despite the SEC rejection, there are almost daily signs that Bitcoin is becoming more widely available and accepted in everyday life. In many corners of the economy, people can now pay their mortgage and buy tickets to sporting events using cryptocurrencies.
Prepare For BTC-USD To Run Higher
The Taproot upgrade is a major milestone for Bitcoin and it makes the biggest cryptocurrency even more useful going forward.
This fact should help to sustain the current rally in BTC and push the price higher. Taproot arrives just as Bitcoin is growing in popularity and acceptance. While skeptics continue to disparage Bitcoin, and cryptocurrencies in general, those who follow the digital sphere closely are becoming more excited and bullish about what the future holds.
With Bitcoin continuing to defy expectations and pushing near all-time highs, now would be a good time for investors to gain exposure to the digital token. While paying more than $60,000 for a single Bitcoin might be a tall order for most investors, the BITO ETF can be purchased for about $40 a share.
Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.