More than 16 years after Bitcoin’s creation, the cryptocurrency has crossed the 100,000 dollar threshold (about 950,000 euros) for the first time. The oldest and best-known digital currency climbed sharply on Thursday evening and broke one record after another.
The price now stood at $103,253. Bitcoin has soared, especially since the US presidential election on November 4. Investors hope that election winner Donald Trump will implement crypto-friendly regulations.
Bitcoin Boom thanks to Donald Trump
The partisan mood in the crypto scene was fueled by Trump’s announcement that he would make crypto champion Paul Atkins his preferred candidate to lead the powerful US Securities and Exchange Commission (SEC). Previous SEC Chairman Gary Gensler, on the other hand, was known for his tough stance on digital currencies. Gensler announced on November 21 that he would leave his post when Donald Trump moves into the White House in January.
For many crypto investors, Gensler was a red flag. Under his leadership, the SEC generally enforced strict rules on digital currency transactions and cracked down on cases of crypto fraud. Trump highlighted Atkins’ crypto affinity on his social media platform Truth Social: “He also recognizes that digital assets and other innovations are critical to making America greater than ever before.”
If Atkins actually becomes SEC boss, experts expect more crypto ETFs to be approved. So far, there are only Bitcoin and Ether as ETFs in the US. The abbreviation ETF stands for Exchange Traded Funds, which means exchange-traded index funds. Smaller cryptocurrencies, called altcoins, also benefited from the speculation.
After Gensler’s departure, many crypto investors are not only hoping for laxer oversight, but are also betting that the new US administration under Trump will invest in Bitcoin to counterbalance the state’s gold reserves. The US owns more than 8,100 tonnes of the precious metal worth around $670 billion, making the country the largest known gold investor in the world.
What might US reserves look like in Bitcoin?
However, during the election campaign it remained unclear whether Trump simply wanted to accumulate Bitcoin assets seized from criminals in a crypto sanctuary, or whether his administration would actively buy Bitcoin.
Republican Senator Cynthia Lumis of the US state of Wyoming, who is considered a Trump confidante, had proposed buying a total of one million Bitcoin over five years and holding it for at least 20 years. Since the maximum number of Bitcoins is limited to 21 million, that would be just under 4.8 percent of total Bitcoin ownership.
Experts see the investment strategy of the American company MicroStrategy as another reason for the increase in the value of Bitcoin. Company boss Michael Saylor is considered a hardcore Bitcoiner and has so far raised the equivalent of about $32 billion in digital currency with money from corporate bonds.
MicroStrategy recently announced it will raise $2.6 billion in new debt. The debt is raised by issuing so-called convertible bonds and is reserved for institutional investors. MicroStrategy wants to invest the new capital in Bitcoin.
Gambling on the Bitcoin price
The recent price increase was partly caused by the fact that, after the approval of Bitcoin ETFs in the US at the beginning of January, it is now also possible to trade Bitcoin options, that is, to bet on the further development of the price. This means that larger investors in particular can protect themselves against falling prices when investing in Bitcoin.
To do this, you usually use so-called put options, which means that you place a bet on falling prices for little money. This has been possible since this Wednesday. Furthermore, bets on rising prices, so-called call options, can be used as another vehicle to bet on higher Bitcoin prices with even greater risk.
On its first day of trading, options worth nearly $2 billion were traded on BlackRock’s Bitcoin ETF alone. 82 percent of investors bet on rising prices (calls), only 18 percent on falling prices.
Many retail investors who previously avoided Bitcoin are now wondering if they missed a lucrative trend. Crypto influencers like Roman Reher, who runs the Bitcoin channel “Blocktrainer” on YouTube, repeatedly say that it is never too late to get started with Bitcoin. Despite large fluctuations, the Bitcoin price has only one direction in the long term, namely upwards.
“Bitcoin is an object of speculation”
Consumer advocates continue to warn against crypto fever contagion. According to the consumer advice center, no one can reliably predict whether Bitcoin, its variants or other cryptocurrencies will become established as an alternative to conventional monetary systems in the medium term. “The development of recent years has increasingly moved away from the idea of an alternative means of payment and towards an object of speculation.”
Consumer advocates see several risks. “Particularly noteworthy here are the huge price fluctuations, including total losses, and the lack of security systems.” Bitcoin is therefore not recommended as an investment for consumers. If you still want to buy Bitcoin, you should only use money you can live without. “Your investment may not exceed a maximum of ten percent of your total investment.”
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
