NEW YORK — Bitcoin has breached the $100,000 level as the world's most popular cryptocurrency continues its massive rally sparked by the election of President Donald Trump.
The milestone comes just hours after the president-elect said he would nominate crypto advocate Paul Atkins to be the next chairman of the Securities and Exchange Commission, signaling a deregulatory stance toward the crypto industry. It happened.
Since Trump won the November 5 presidential election, Bitcoin has soared to unprecedented heights. According to CoinDesk, Bitcoin rose dramatically from $69,374 on election day to $103,713 on Wednesday. Just two years ago, Bitcoin fell below $17,000 following the collapse of cryptocurrency exchange FTX.
It is unclear how long Bitcoin will remain above $100,000. As with everything in the volatile crypto world, it is impossible to predict the future. And while some are bullish on future returns, other experts continue to warn of investment risks.
Here's what you need to know:
Cryptocurrencies have been around for a while. But you've probably heard about it more and more over the past few years.
Basically, cryptocurrencies are digital money. This type of currency is designed to function through an online network without a central authority, meaning it is usually not backed by a government or banking institution, and transactions are recorded on a technology called blockchain.
Bitcoin is the largest and oldest cryptocurrency, but other assets such as Ethereum, Tether, and Dogecoin have also grown in popularity over the years. Although some investors view cryptocurrencies as a “digital alternative” to traditional money, the majority of everyday financial transactions are still done using fiat currencies such as the dollar. Bitcoin can also be highly volatile as its price depends on larger market conditions.
Many of the recent actions are related to the outcome of the US presidential election.
Trump, a former crypto skeptic, has promised to make the United States the “crypto capital of the planet” and create a “strategic reserve fund” for Bitcoin. His campaign accepts donations in cryptocurrencies and appealed to fans at a Bitcoin conference in July. He also launched a new business, World Liberty Financial, to trade cryptocurrencies with his family.
Crypto industry insiders have welcomed Trump's victory, hoping he can push through long-sought legislative and regulatory changes and, generally speaking, less red tape. The aim is to increase a sense of legitimacy without going through the formalities.
President Trump moved in that direction Wednesday, saying he intends to nominate Paul Atkins to head the Securities and Exchange Commission. Mr. Atkins served as an SEC commissioner during the George W. Bush presidency. In the years since leaving government, Mr. Atkins has been advocating against excessive market regulation. He joined the cryptocurrency advocacy group Token Alliance in 2017.
Under current Chairman Gary Gensler, the SEC has cracked down on the cryptocurrency industry, penalizing numerous companies for violating securities laws. But along the way, he has faced criticism from industry insiders, including Robinhood's chief legal officer, who described Gensler's approach to cryptocurrencies as “draconian” and “adversarial.” Gensler will resign when President Trump takes office.
One crypto-friendly move the SEC made under Gensler was approval in January of a spot Bitcoin ETF (exchange-traded fund) that allows investors to own stocks without buying Bitcoin directly. . Spot ETFs were the primary driver of Bitcoin prices before the election, but like much of the recent crypto momentum, they saw record inflows after the election.
History has shown that with cryptocurrencies, you can lose money quickly after making money. Long-term price trends depend on larger market conditions. Trading takes place at any time of the day.
At the beginning of the coronavirus disease (COVID-19) pandemic, the price of Bitcoin was just over $5,000. Its price rose to nearly $69,000 by November 2021, when demand for technology assets was on the rise, but then collapsed during a series of aggressive interest rate hikes by the Federal Reserve. And the collapse of FTX in late 2022 significantly eroded confidence in cryptocurrencies overall, sending Bitcoin below $17,000.
As inflation began to subside, many investors began returning, and profits soared on the promise and subsequent early success of spot ETFs. But experts still emphasize caution, especially for investors with little money. And the loosening of regulations by the incoming Trump administration could mean fewer guardrails.
“I would say keep it simple, and don't take more risks than you can afford,” said Adam Morgan McCarthy, a research analyst at Silkworm.What happens next? He added that there is no “magic 8 ball” to know for sure.
Assets like Bitcoin are generated through a process called “mining” that consumes large amounts of energy. Operations that rely on polluting sources have been of particular concern for many years.
A recent study published by United Nations University and Earth's Future Journal found that the carbon footprint of Bitcoin mining in 2020-2021 across 76 countries was equivalent to burning 84 billion pounds of coal or burning 190 natural gas-fired power plants. It was found that the emissions are comparable to those caused by operation. Coal met the majority of Bitcoin's electricity needs (45%), followed by natural gas (21%) and hydropower (16%).
The environmental impact of Bitcoin mining primarily comes down to the energy source used. Industry analysts argue that the use of clean energy has increased in recent years, coinciding with growing calls for climate protection.
