Bitcoin surged on Tuesday, extending its recent gains and briefly reaching record highs, driven by optimism surrounding the potential establishment of a Strategic Reserve under incoming U.S. President Donald Trump.
Crypto markets were also buoyed by MicroStrategy’s inclusion in the Nasdaq 100 index, although overall gains slowed as investors awaited a Federal Reserve meeting later in the week.
Bitcoin rose by 1.9% to $106,623.5 by 00:25 ET (05:25 GMT), hitting an all-time high of $107,767.6 earlier in the day.
Bitcoin Boosted by Trump’s Strategic Reserve Proposal, But Doubts Remain
The latest rally in Bitcoin largely followed Trump’s comments last week during a CNBC interview, where he suggested the idea of a Strategic Bitcoin Reserve, similar to the U.S. petroleum reserve.
Trump had promised crypto-friendly policies if elected, and his recent nominations for key cabinet and regulatory roles have leaned toward pro-crypto positions. However, analysts remain cautious about the feasibility of a Bitcoin reserve, particularly regarding its formation.
If Trump were to establish the reserve via an executive order, he would face limited Treasury funds for additional Bitcoin purchases. Furthermore, a future administration could reverse his order, effectively dissolving the reserve.
For a Bitcoin reserve similar to the Strategic Petroleum Reserve, Congressional approval would be required, as noted by Compass Point in a recent research report.
While Republicans do hold a majority in Congress, the growing federal deficit would likely necessitate additional funding to acquire more Bitcoin, a situation that may face resistance from bipartisan lawmakers, as reducing the fiscal deficit has become a highly debated issue.Compass Point also sees little likelihood of the Bitcoin Act—a recently proposed legislation calling for quarterly government purchases of Bitcoin—being passed.
The Department of Justice currently holds around 200,000 Bitcoins, mostly seized from criminals. This stash could potentially be used for a reserve, although the specifics of how this would be implemented remain unclear.
Crypto Prices Today: Altcoins Cool Ahead of Fed Meeting
While Bitcoin maintained its upward momentum, broader crypto prices were less positive as investor sentiment cooled ahead of the Federal Reserve meeting this week. However, many altcoins had posted solid gains recently, tracking Bitcoin’s rally.
Ether, the second-largest cryptocurrency, rose 1.1% to $4,011.80, moving closer to its record high from 2021. XRP, the third-largest crypto, gained 3.7%, reaching $2.4999.
Meanwhile, Solana, Cardano, and Polygon saw declines of over 3% each, and among meme coins, Dogecoin dropped 1.4%.
The Fed is widely expected to reduce interest rates by 25 basis points on Wednesday. However, the focus will be on the central bank’s future outlook on rates, especially in light of persistent inflation.
The central bank may signal a slower pace of rate cuts in 2025, suggesting that high rates could persist for an extended period. This could create headwinds for crypto prices.
