Bitcoin crosses $107,000 again after Trump confirms plans for reserve

REUTERS: Bitcoin surpassed $107,000 again on Tuesday after President-elect Donald Trump reiterated that he plans to create a US bitcoin strategic reserve similar to its strategic oil reserve, stoking the enthusiasm of crypto bulls.

Earlier, investor sentiment also got a lift from the inclusion of MicroStrategy (MSTR.O), into the tech-heavy Nasdaq 100 index that will likely lead to more inflows for the software firm turned bitcoin buyer.

Bitcoin, the world’s biggest and best known cryptocurrency, extended gains to a session high of $107,148 and was most recently at $106,877, up 5.43 per cent from late Friday. The No. 2 digital currency ether was up 1.85 per cent at $3,975.70.

“We’re in blue sky territory here,” said Tony Sycamore, an analyst at IG. “The next figure the market will be looking for is $110,000. The pullback that a lot of people were waiting for just didn’t happen, because now we’ve got this news.”

Bitcoin and crypto have been catapulted into the spotlight as investors wager the incoming Trump administration will usher in a friendlier regulatory environment, boosting sentiment around the alternative currency. Bitcoin is up about 150 per cent in 2024.

“We’re gonna do something great with crypto because we don’t want China or anybody else – not just China but others are embracing it – and we want to be the head,” Trump told CNBC,  late last week.

When asked if he plans to build a crypto reserve similar to oil reserves, Trump said: “Yeah, I think so.” He advocated the same thing earlier this year.

Governments around the world held 2.2 per cent of bitcoin’s total supply as of July, according to data provider CoinGecko, with the United States possessing nearly 200,000 bitcoins valued at more than $20 billion at current levels.

China, UK, Bhutan and El Salvador are the other countries with a significant amount of bitcoins, data site BitcoinTreasuries, showed.

Other countries have also been considering cryptocurrency strategic reserves.

Russian President Vladimir Putin earlier this month said the current US administration was undermining the role of the US dollar as the reserve currency in the global economy by using it for political purposes, forcing many countries to turn to alternative assets, including cryptocurrencies.

There are skeptics though, with Federal Reserve Chair Jerome Powell likening bitcoin to gold earlier this month. Analysts also point out that any such move will take time to implement.

“I think we still need to be cautious on a BTC strategic reserve, and at least consider that this is not likely to happen anytime soon,” said Chris Weston, head of research at Pepperstone.

“Of course, any comment from Trump that offers an increased degree of hope that plans for a strategic reserve are evolving are an obvious tailwind, but this would come with consequences which would need to be carefully considered and well telegraphed to market players.”

Bitcoin has surged more than 50 per cent since the Nov. 5 election that saw Trump elected along with many other pro-crypto candidates. The total value of the cryptocurrency market has almost doubled over the year so far to hit a record over $3.8 trillion, according to CoinGecko.

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