Bitcoin soared to a record high above $106,000 on Monday following comments from President-elect Donald Trump suggesting plans to establish a US bitcoin strategic reserve, akin to its strategic oil reserve, fueling optimism among cryptocurrency enthusiasts.
The world’s largest and most recognised cryptocurrency hit an all-time high of $106,533, last trading up 3.2% at $104,462. Meanwhile, smaller cryptocurrency ether rose by 1.5% to $3,965.
“We’re in uncharted territory here,” said Tony Sycamore, an analyst at IG. “The next level the market will target is $110,000. The pullback many anticipated didn’t materialise, thanks to this news.”
Investor sentiment was further boosted by MicroStrategy’s inclusion in the tech-heavy Nasdaq 100 index, likely to attract additional inflows for the software firm turned bitcoin advocate. Bitcoin has gained 192% so far this year.
“We’re going to do something great with crypto because we don’t want China or anyone else – not just China, but others are embracing it – and we want to lead,” Trump told CNBC late last week. When asked about plans for a crypto reserve akin to oil reserves, Trump responded: “Yes, I think so.”
Data from CoinGecko reveals that governments worldwide held 2.2% of bitcoin’s total supply as of July, with the United States owning nearly 200,000 bitcoins valued at over $20 billion at current prices. Other significant holders include China, the UK, Bhutan, and El Salvador, according to BitcoinTreasuries.
Several other nations are also contemplating the establishment of cryptocurrency strategic reserves. Russian President Vladimir Putin recently criticised the current US administration for undermining the US dollar’s role as a global reserve currency through political manoeuvring, prompting many nations to explore alternative assets, including cryptocurrencies.
“For instance, bitcoin – who can ban it? No one,” Putin remarked.
However, scepticism remains. Federal Reserve Chair Jerome Powell likened bitcoin to gold earlier this month. Analysts warn that any move towards a US bitcoin strategic reserve would require time and careful planning.
“I think we need to remain cautious about a BTC strategic reserve and consider that this is unlikely to happen imminently,” said Chris Weston, head of research at Pepperstone.
“Any comments from Trump suggesting progress on a strategic reserve are certainly positive, but such moves would carry significant consequences that must be carefully weighed and transparently communicated to market participants,”
he said.
Bitcoin has surged more than 50% since the 5 November election, which saw Trump and numerous pro-crypto candidates elected. The total value of the cryptocurrency market has nearly doubled this year, reaching a record $3.8 trillion, according to CoinGecko.
Trump – who once referred to cryptocurrency as a scam – embraced digital assets during his campaign, vowing to make the United States the “crypto capital of the planet.”
This month, Trump appointed former PayPal executive David Sacks, a close associate of adviser Elon Musk, as White House Czar for artificial intelligence and cryptocurrencies. He also announced plans to nominate pro-crypto Washington lawyer Paul Atkins as head of the Securities and Exchange Commission.
On Friday, Nasdaq announced that MicroStrategy would join the Nasdaq-100 Index, effective before the market opens on 23 December. MicroStrategy, an aggressive investor in bitcoin, has seen its shares rise more than six-fold this year, pushing its market value to nearly $94 billion. The company remains the largest corporate holder of the cryptocurrency.
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