NEW YORK: Bitcoin rose to a record high on President-elect Donald Trump’s support for digital assets and optimism about the upcoming inclusion of MicroStrategy Inc., an accumulator of the token, in a key US stock gauge.
The largest virtual currency rose more than 3.5% at one point on Monday in Asia to an unprecedented $106,493, exceeding its previous peak from December 5. MicroStrategy announced Monday that it bought another $1.5 billion of Bitcoin in the past week, Bloomberg reported.
The Bitcoin fear and greed index, a gauge for the sentiment among traders reads 83, on a scale from 0 to 100, signalling “extreme greed” among traders. This is consistent with the sentiment last week and last month.
Analysts remain bullish on BTC, and set a $110,000 target for the largest cryptocurrency, while it is in the “blue sky” territory, meaning the token breaks above its previous all-time high.
Trump is moving toward creating a friendly regulatory backdrop for digital assets, undoing a crackdown imposed by President Joe Biden’s outgoing administration. The Republican has also backed the idea of a strategic national Bitcoin stockpile, though many question the feasibility of the proposal.
The Bitcoin rally is largely driven by institutional demand, evident from consistent inflows to Bitcoin ETFs all week.
Last week, president-elect Donald Trump commented on his strategic Bitcoin reserve and said that the US will do something great with crypto.
Bitcoin’s market capitalization crossed $2.071 trillion and the largest crypto token pulled back slightly to trade at $104,773, at the time of writing.
Most altcoins ranked within the top 100 cryptocurrencies by market capitalization have recovered from their correction over the weekend and observed slight gains on the day.
Coinglass data shows that over $118 million in derivatives positions were liquidated in response to Bitcoin’s new all-time high.
A lot of people are “basing their expectation on a much more favourable administration,” Aya Kantorovich, co-founder of institutional crypto platform August, said on Bloomberg Television. The optimism is reflected in demand for exchange-traded funds investing in digital assets, she added.
On Friday, Nasdaq Global Indexes said MicroStrategy will join the Nasdaq 100 Index, the US technology stock gauge tracked by an array of investment funds. The software maker has transformed into a leveraged bet on Bitcoin as the company raises billions of dollars to plough into the digital asset.
Bitcoin through Sunday cemented a seven-week winning streak, the longest such run since 2021. But the pace of gains cooled more recently, which could be an indication that “a pullback may be coming,” IG Australia Pty Market Analyst Tony Sycamore wrote in a note.
The Fed (that’s the US central bank) meets up on Tuesday and Wednesday to decide whether to cut the level of interest rates. Previous guidance indicates that officials will cut borrowing costs by at least 25 basis points and markets are now pricing in that reduction as they scoop up risk assets that will get more affordable once rates go down.
Cryptocurrency markets are optimistic by nature (as any other market). This means that if the Fed decides to skip a cut, traders may get really frustrated and fear may spark a selloff.
But that’s an extreme case — recent inflation data came in as expected, further boosting the chances of a rate cut this week. Besides Bitcoin, other tokens also pumped in anticipation of the rate slash — Ether rose 4% to draw closer to the key $4,000 level.
