Bitcoin skyrocketed to a record high above $106,000 on Monday after President-elect Donald Trump hinted at plans to establish a U.S. Bitcoin Strategic Reserve, akin to the nation’s Strategic Petroleum Reserve, sparking excitement among cryptocurrency enthusiasts.
The world’s largest and most well-known cryptocurrency reached a peak of $106,533 before settling up 3.2% at $104,462. Meanwhile, smaller cryptocurrency Ether climbed 1.5% to $3,965.
“We’re in uncharted territory,” said Tony Sycamore, an analyst at IG. “The next target for the market will likely be $110,000. The anticipated pullback never materialized, especially with this latest news fueling momentum.”
Investor optimism was further boosted by the inclusion of MicroStrategy in the tech-heavy Nasdaq 100 index, which is expected to attract more capital flows into the software company turned major Bitcoin investor.
Bitcoin and cryptocurrencies have been thrust into the spotlight as investors anticipate that the incoming Trump administration will adopt a more crypto-friendly regulatory stance, further enhancing the appeal of digital assets. Bitcoin has surged 192% year-to-date.
“We’re going to do something incredible with crypto because we don’t want other nations, like China or anyone else, to take the lead. We want to stay ahead,” Trump told CNBC last week.
When asked about plans for a cryptocurrency reserve similar to the Strategic Petroleum Reserve, Trump responded, “Yes, I think so.”
Globally, governments held 2.2% of Bitcoin’s total supply as of July, according to CoinGecko. The United States alone owns nearly 200,000 bitcoins, valued at over $20 billion at current prices.China, the UK, Bhutan, and El Salvador are among the countries holding significant amounts of Bitcoin, according to data from BitcoinTreasuries.
Several nations are exploring the concept of cryptocurrency strategic reserves. Earlier this month, Russian President Vladimir Putin criticized the current U.S. administration for undermining the U.S. dollar’s role as the global reserve currency by using it as a political tool. This, he argued, has driven many countries to consider alternative assets like cryptocurrencies.
“Take Bitcoin, for example—who can ban it? No one,” Putin stated.
However, skepticism remains. Federal Reserve Chair Jerome Powell recently compared Bitcoin to gold, highlighting its speculative nature. Analysts also caution that implementing a Bitcoin strategic reserve would be a complex and time-consuming process.
“We should remain cautious about a Bitcoin strategic reserve and recognize that it’s unlikely to happen in the near term,” said Chris Weston, head of research at Pepperstone. “While any statements from Trump hinting at progress on such a reserve would boost optimism, these plans would come with significant consequences that need careful consideration and clear communication to the market.”
CRYPTOCURRENCY MOMENTUM
Bitcoin has surged over 50% since the November 5 election, which saw Trump win alongside several pro-crypto candidates. The overall cryptocurrency market has nearly doubled in value this year, reaching a record high of over $3.8 trillion, according to CoinGecko.
Trump—who previously dismissed cryptocurrencies as a scam—pivoted during his campaign, vowing to transform the United States into the “crypto capital of the planet.”This month, Trump appointed David Sacks, a former PayPal (NASDAQ: PYPL) executive and close associate of Trump adviser and major donor Elon Musk, as the White House czar for artificial intelligence and cryptocurrencies.
Trump also announced plans to nominate pro-crypto Washington attorney Paul Atkins to lead the Securities and Exchange Commission (SEC).
On Friday, Nasdaq revealed that MicroStrategy would be included in the Nasdaq-100 Index, effective before market open on December 23.
MicroStrategy, known for its aggressive investments in Bitcoin, has seen its stock price skyrocket more than sixfold this year, boosting its market valuation to nearly $94 billion. The company now holds the largest corporate Bitcoin reserve globally.
Pepperstone’s Chris Weston noted that the market is “front-running the expectation that Michael Saylor, CEO of MicroStrategy, will take advantage of the likely surge in MicroStrategy’s share price following its inclusion in the Nasdaq-100. It’s presumed he’ll sell shares to purchase additional Bitcoin.”
