Bitcoin reached a record high of over $107,000 on Monday following President-elect Donald Trump’s reiterated commitment to establishing a U.S. strategic bitcoin reserve, mirroring the existing strategic oil reserve. This announcement ignited enthusiasm among cryptocurrency investors. The inclusion of MicroStrategy (MSTR.O) in the Nasdaq 100 index further bolstered market sentiment, anticipating increased investment in the software company turned major bitcoin buyer.
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Bitcoin (BTC), the world’s leading cryptocurrency, surged to a session high of $107,148, ultimately settling around $106,877, a 5.43% increase from Friday. Ether (ETH), the second largest digital currency, rose by 1.85% to $3,975.70. This surge marks unprecedented territory for Bitcoin, with analysts predicting the next target at $110,000. The anticipated market correction failed to materialize, fueled by the news of the potential strategic reserve.
Bitcoin’s prominence has grown significantly as investors anticipate a more favorable regulatory environment under the Trump administration. Bitcoin’s value has already increased approximately 150% in 2024. Trump emphasized the importance of U.S. leadership in the crypto space, stating a desire to prevent other nations, particularly China, from dominating the sector. He confirmed his intention to create a crypto reserve akin to oil reserves, a proposal he initially advocated earlier this year.
Government holdings of bitcoin reached 2.2% of the total supply as of July, with the United States possessing nearly 200,000 bitcoins, currently valued at over $20 billion. China, the UK, Bhutan, and El Salvador also hold substantial bitcoin reserves. Other nations are reportedly considering establishing similar strategic cryptocurrency reserves. Russian President Vladimir Putin recently criticized the U.S. government’s use of the dollar for political purposes, suggesting that this has driven countries towards alternative assets like cryptocurrencies.
Despite the growing optimism, some skepticism remains. Federal Reserve Chair Jerome Powell recently compared bitcoin to gold, and analysts caution that implementing a strategic reserve would require significant time. While acknowledging the positive impact of Trump’s statements, experts emphasize the need for careful consideration and clear communication with market participants regarding the potential implications of such a reserve.
Post-Election Crypto Surge
Bitcoin has rallied over 50% since the November 5th election, which saw the victory of Trump and other pro-crypto candidates. The total cryptocurrency market capitalization has nearly doubled this year, exceeding $3.8 trillion. Trump, who previously labeled crypto a scam, embraced digital assets during his campaign, pledging to establish the United States as the global crypto capital. He recently appointed former PayPal executive David Sacks, a close associate of Elon Musk, as the White House czar for artificial intelligence and cryptocurrencies. Furthermore, Trump intends to nominate pro-crypto attorney Paul Atkins to lead the Securities and Exchange Commission.
Nasdaq’s announcement regarding MicroStrategy’s inclusion in the Nasdaq-100 Index, effective December 23rd, further fueled the market surge. MicroStrategy’s aggressive bitcoin investments have propelled its stock price more than six-fold this year, resulting in a market capitalization nearing $94 billion, making it the largest corporate bitcoin holder. This inclusion in the Nasdaq 100 is expected to drive further investment in MicroStrategy, potentially enabling the company to acquire more bitcoin through debt and equity offerings, creating a positive feedback loop for bitcoin’s price. This unexpected inclusion has generated significant excitement, with many viewing it as the catalyst for a cycle of capital growth that could significantly impact bitcoin’s value.
