Bitcoin has surged to near historic highs, approaching the $100,000 mark for the first time, following the election of Republican Donald Trump as the 47th president of the United States. This political shift has sparked optimism among cryptocurrency enthusiasts, who anticipate a more favorable regulatory environment under Trump’s administration.
Bitcoin’s Historic Surge and Growing Optimism
During late afternoon trading, Bitcoin fluctuated between $98,000 and $99,000, briefly surpassing $99,073. The cryptocurrency has more than doubled in value this year, with an impressive 40% increase in just two weeks since Trump’s victory and the election of pro-crypto lawmakers to Congress.
Trump, who voiced strong support for digital assets during his campaign, had pledged to make the US the “crypto capital of the planet” and even promised to build a national stockpile of Bitcoin. Crypto investors are hopeful that Trump’s administration will bring an end to the increased regulatory scrutiny seen under US Securities and Exchange Commission (SEC) Chairman Gary Gensler, whom Trump has indicated he plans to replace.
Trump’s Personal Crypto Interests Fuel Market Optimism
In September, Trump unveiled a new crypto business, World Liberty Financial, though details about the venture have been limited. However, his personal involvement in the crypto space has been interpreted as a bullish sign by investors. Additionally, tech billionaire and Trump ally Elon Musk, a prominent supporter of cryptocurrencies, has further fueled optimism within the sector.
Bitcoin’s Mainstream Acceptance and Historic Resilience
Bitcoin, the world’s largest cryptocurrency by market cap, is edging closer to mainstream acceptance, more than 16 years after its creation. According to Alicia Kao, Managing Director of crypto exchange KuCoin, “Everyone who’s bought bitcoin at any point in history is currently in profit.” She added, “But those who bought it early, when there were significant obstacles to doing so and the might of the world’s financial and governmental forces intent on crushing it, are the real winners.”
Bitcoin’s rapid rebound from a dip below $16,000 in late 2022 has been driven in part by the approval of US-listed bitcoin exchange-traded funds (ETFs) in January of this year. After years of resistance from the SEC, the approval of these ETFs has allowed more investors, particularly institutional ones, to gain exposure to Bitcoin.
Surge in Crypto-Related Stocks
Bitcoin’s rally has been mirrored by a rise in crypto-related stocks, with investors pouring in capital. “Once you break out to new highs, you attract a lot of new capital,” said John LaForge, head of real asset strategy at Wells Fargo Investment Institute. He likened the current moment to gold’s surge in the 1970s, saying, “It’s like gold in the 1970s, where this new high is in a price discovery mode. You don’t know how high it’s going to go.”
Critics Highlight Concerns Over Energy Usage and Crime
However, the rapid rise of Bitcoin is not without its critics. The cryptocurrency sector is still grappling with its energy consumption, with mining operations facing scrutiny over their environmental impact. Some have raised concerns over the strain crypto mining places on power grids and its contribution to greenhouse gas emissions.
Additionally, crypto-related crime remains a serious issue. According to research from Chainalysis, at least $24.2 billion worth of cryptocurrency was sent to illicit wallet addresses last year, including those linked to terrorist financing and scams.
Despite these challenges, Bitcoin’s meteoric rise signals a new era for cryptocurrency, with growing mainstream interest and the potential for more widespread adoption under a pro-crypto political climate.
