Bitcoin's price has breached the long-awaited $100,000 mark, raising questions about how high it will rise and whether it can shake off its notorious volatility.
The world's largest cryptocurrency rose to about $103,400 just after 4:00 GMT on Thursday, but has since fallen slightly.
Dan Coatsworth, investment analyst at AJ Bell, described this as a “magical moment” for cryptocurrencies and said there was a “clear link” to Donald Trump’s election victory.
The president-elect previously promised to make the United States the world's “crypto” and “Bitcoin superpower” and help boost Bitcoin prices.
It broke the $100,000 barrier after Trump announced he would nominate former Securities and Exchange Commission Commissioner Paul Atkins to lead the Wall Street regulator.
Atkins is seen as much more pro-cryptocurrency than current CEO Gary Gensler.
“There is clearly an expectation that the new administration will be a little more favorable toward cryptocurrencies than the old one,” said Andrew O’Neill, a digital assets expert at S&P Global.
“So for the price of Bitcoin, I think that’s what has driven the trend so far.” [and it will] It will probably continue into the new year,” he added.
However, Bitcoin has a history of steep declines as well as spikes, and some analysts warn that that is unlikely to change.
“While the skyrocketing value of cryptocurrencies has made many rich this year, this risky asset is not suitable for everyone,” Coatsworth said.
“It's volatile, unpredictable, driven by speculation, and none of these are investments that will keep you up at night.”
During the US presidential election campaign, Trump appealed to crypto investors with a promise to fire Gary Gensler, the chairman of the US financial regulator Securities and Exchange Commission (SEC), on his “first day” in office. I tried.
Gensler's approach to the crypto sector has been decidedly less friendly than Trump's.
He told the BBC in September that the industry was “infested with fraud, scammers and fraudsters”.
Under his leadership, the SEC brought a record 46 crypto-related enforcement actions against companies in 2023.
Gensler said in November that he would resign on January 20, the day President Trump was inaugurated.
The selection of Paul Atkins to replace him at the head of the SEC has been welcomed by crypto advocates.
Mike Novogratz, founder and CEO of US cryptocurrency company Galaxy Digital, said he hopes a “clearer regulatory path” will accelerate the entry of the digital currency ecosystem into the “financial mainstream”. He said that
Bitcoin's value declined significantly in 2024 compared to previous years.
In 2022, its price fell below $16,000 due to the bankruptcy of the cryptocurrency exchange FTX.
There are many other important events besides Trump's election victory that give investors confidence that its value will continue to rise.
The SEC has approved several spot Bitcoin exchange-traded funds (ETFs) that will allow investment giants like BlackRock, Fidelity, and Grayscale to sell products based on the price of Bitcoin.
Some of these products are seeing billions of dollars in cash inflows.
But the fact that its value can suddenly plummet is a reminder that Bitcoin is different from traditional currencies, and investors have no protection or protection if they incur losses on their Bitcoin investment. It reminds us that there is no remedy.
Carol Alexander, a finance professor at the University of Sussex, told BBC News that the price of Bitcoin will continue to rise due to fear of missing out (FOMO) among young people.
However, she added that while this could cause a rally in other cryptocurrencies, many young investors investing in meme coins are losing money.
