On Monday, the world’s most famous cryptocurrency, Bitcoin, hit a new record high of $106,000 after it briefly tipped to $107,000. According to Coindesk at 18:00 WAT, the biggest coin traded at the price level of $106,918.
Recall that about two weeks ago, Bitcoin soared past the $100,000 mark for the first time. BTC, then, zoomed to a $2 trillion market capitalization for the first time as it set a record for a massive market valuation price.
The new achievement has been attributed to an effect following President-elect Donald Trump’s plans to create a U.S. bitcoin strategic reserve similar to its strategic oil which further raised the enthusiasm of crypto bulls. Currently, Bitcoin is up 192 per cent for the year.
“We’re in blue sky territory here. The next figure the market will be looking for is $110,000. The pullback that a lot of people were waiting for just didn’t happen, because now we’ve got this news,” said Tony Sycamore, an analyst at IG.
For a month now since Donald Trump’s victory in the US election, Bitcoin and crypto have skyrocketed into the spotlight. Also, crypto investors positively anticipate the incoming Trump administration which promises to usher in a friendlier regulatory environment, boosting sentiment around the alternate currency.
“We’re gonna do something great with crypto because we don’t want China or anybody else – not just China but others are embracing it – and we want to be the head,” Trump told CNBC, late last week.
Donald Trump during his campaign tagged himself as the “crypto candidate”, who is set to embrace digital currencies on multiple fronts including accepting donations in various crypto assets, signalling his acceptance of the burgeoning sector.
Even after his victory, he has been making decisions that favour the crypto world. The appointment of Elon Musk to D.O.G.E (Department of Government Efficiency), his social media and technology company’s (TMTG) pre-acquisition of Bakkt, a crypto trading platform, and the appointment of David Sacks as the white House AI and crypto czar.
When asked if he plans to build a crypto reserve similar to oil reserves, Trump said: “Yeah, I think so.”
On a more global scale, governments around the world held 2.2 per cent of Bitcoin’s total supply as of July. According to data provider CoinGecko, the United States possesses nearly 200,000 bitcoins valued at more than $20 billion at the current price level. Countries like China, the UK, Bhutan, and El Salvador are the other countries with a significant amount of bitcoins.
Other countries have also been considering strategic reserves in cryptocurrency. Earlier this month, Russian President Vladimir Putin accused Biden’s administration of undermining the role of the U.S. dollar as the reserve currency. He also undermined its use for political purposes. This has seen many countries turn to alternative assets for reserves, including cryptocurrencies.
Bitcoin – the sky as the starting point
Bitcoin’s price has now risen about 50 per cent since election day in November and is up more than 100 per cent for the year overall.
During his election rally, Donald Trump promised a more crypto-friendly tenure than current president Joe Biden. According to a report from Reuters, Trump’s pro-crypto stance has caused small businesses to shift some of their investments from cash to crypto. Another source reported that the crypto industry donated a total of $245 million during the election cycle.
Last month, Trump selected Paul Atkins, a crypto proponent, as the chairman of the Securities and Exchange Commission (SEC). As the main market regulator, this raised hopes for a more favourable regulatory climate for the crypto industry thereby causing Bitcoin to set a new record mark.
Under Biden, the SEC has taken legal action against crypto exchanges like Coinbase. The agency claimed that some crypto tokens sold through the platforms were unlicensed securities.
In addition, Gary Gensler, the current SEC chair has launched a series of lawsuits against many of crypto’s biggest names including exchanges Coinbase, Kraken Crypto.com, Ripple, and Consensys. Under his leadership, 18 per cent of the SEC’s tips, complaints, and referrals were crypto-related, “despite the crypto markets comprising less than 1 per cent” of US capital markets, the agency said in its statement announcing his departure in November.
Trump, who has vowed to make the US “the bitcoin superpower of the world”, has nominated several crypto enthusiasts to top roles. This includes tipping Howard Lutnick to run the commerce department and Elon Musk to co-head a cost-saving effort dubbed the “Department of Government Efficiency” (DOGE).
With the new record, it’s only a matter of time for Bitcoin to hit $120,000 within months. “BTC remains small compared to other macro assets, and the growth of its market cap will attract large institutions that are now able to allocate a meaningful size”, says Min Jung of Presto Research investment analyst.
The anticipated sell-off is expected to be short-lived, as long-term holders and new buyers step in to capitalize on the temporary dip. Also, Trump’s economic policies, particularly on promoting technology adoption in governance are likely to increase Bitcoin’s mainstream adoption and institutional inflows.
Also Read: Bitcoin passes the $100,000 mark, experts expect a surge to $120,000 soon.
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