Why Bitcoin’s Price Is Spiking This Week

Bitcoin is experiencing an epic rebound. After falling to a low of about $62,650 on Aug. 16, the cryptocurrency climbed to roughly $80,000 this week, putting the rally from that recent bottom at about 27%.

Crypto market observers are touting several reasons for the turnaround, including renewed optimism around U.S. crypto regulation via the CLARITY Act and a short squeeze that forced more than $4 billion in bearish crypto positions to be liquidated. But bitcoin proponents also say the risks that come with a global financial system heavily dependent on one country’s currency and financial infrastructure are becoming too obvious to ignore.

The United States has enormous influence over both the supply of dollars and who gets access to the dollar-based financial system. Former French finance minister Valéry Giscard d’Estaing famously described this arrangement as an “exorbitant privilege.” The phrase referred to the ability of the U.S. to finance itself in its own currency while much of the rest of the world must obtain dollars to participate in international commerce.

For many bitcoin proponents, it is no coincidence that bitcoin’s recent price spike has come at the same time that the risks of this centralized financial architecture are on full display to the entire world.