Mrinalini Krishna is the Senior Editor of investing news at Investopedia. She’s been a journalist for more than 10 years covering business, personal finance, and investing news.
Learn about our editorial policies
Updated December 05, 2024 10:18 AM EST
Dan Kitwood/Getty Images
0 seconds of 15 secondsVolume 0%
5 Foreign Countries That Own the Most U.S. Debt
CLOSE
KEY TAKEAWAYS
- Bitcoin traded above $100,000 for the first time ever amid optimism around the incoming pro-crypto Trump administration.
- The latest surge comes after Trump picked Paul Atkins to head the U.S. Securities and Exchange Commission, a nomination viewed favorably by the crypto industry.
- Bitcoin had stumbled in recent days after a strong post-election rally as some investors took profits. Some experts warn of a correction in bitcoin prices due to excessive leverage.
Bitcoin (BTCUSD) traded above $100,000 for the first time ever late Wednesday, then kept rising.
The largest cryptocurrency by market cap recently traded above $103,000, according to CoinDesk. The most recent price surge came after President-elect Donald Trump nominated pro-crypto Paul Atkins to lead the Securities and Exchange Commission.
Bitcoin had come close to breaching $100,000 in November thanks to a post-election rally, later falling as low as $91,000 amid profit taking. The latest moves have the estimated total market cap of crypto above $3.7 trillion, according to CoinMarketCap.1
The late-year rally in bitcoin prices has been driven largely by the expectation of more clarity around cryptocurrency regulation and a more crypto-friendly administration since Trump’s electoral victory, with investors pouring money into bitcoin alongside crypto-related stocks and exchange-traded funds.
“One of the big changes taking place in the US post-election is the emergence of a new (“counter”) elite that is much more comfortable with innovations and disruption, is pro-liberalization and de-regulation, and is generally less risk-averse,” wrote Mohamed El-Arian, chief economic advisor at Allianz, early Thursday on X.2 “It is a change that… significantly enhances prospects for wider institutional and retail adoption of crypto assets and, therefore, their role in the payments eco-system and as part of investment portfolios.”
Investor Optimism Continues To Power Bitcoin Prices
Investors have cheered news about the incoming administration setting up a cryptocurrency advisory council and, possibly, also a bitcoin strategic reserve.
The nomination of Atkins for SEC chair was seen as more good news for the crypto industry after the current leader of the agency, Gary Gensler, announced his departure from the role. Gensler was often criticized by crypto backers for the SEC’s enforcement-heavy approach under his leadership.
Bitcoin-related stocks have also see gains lately. MicroStrategy (MSTR), which owns over 402,100 bitcoin—worth over $40 billion at current prices—is up more than 540% year-to-date.
A Few Missteps But Bitcoin Bulls Undeterred
It had already been a busy year for bitcoin, with the approval of spot bitcoin ETFs and a “halving” that slowed down the pace at which new bitcoin are brought into supply. A supply-demand imbalance has helped drive bitcoin prices higher.
Still, some experts warn against use of excessive leverage and over-exuberance on the part of investors. Mike Novogratz, CEO of Galaxy Investment Partners, has said he expects bitcoin prices to move back toward $80,000.
“The crypto community is levered to the gills, and so there will be a correction,” he said recently on CNBC.3
Bitcoin bulls remained largely undeterred during recent wobbles in bitcoin’s price.
In the near term, its price could be propped up by a spate of corporate purchases as bitcoin gains footing as a mainstream investment over the longer term, with sudden price volatility offering buying opportunities.
“One reason bitcoin pullbacks have been so violent in the past is that, every time BTC started to retreat, people would start to worry that it was going to $0. That’s now off the table, and there is a growing sea of investors looking for an entry point instead,” said Bitwise Investment CIO Matt Hougan in a late-November note.4
Cre: MRINALINI KRISHNA
