The price of bitcoin and other cryptocurrencies soared Monday, extending a rally sparked last week by the re-election of former President Donald Trump.
The value of Bitcoin soared nearly 11% in early trading Monday, hitting a record high by surpassing $87,000 for the first time ever. Ether, the second-largest cryptocurrency by market capitalization, jumped 5.5%.
The euphoria also lifted lesser-known pieces. Litecoin price rose more than 4%, while dogecoin soared almost 25%.
“They were collectively in tears,” Katie Stockton, founder of market research company Fairlead Strategies, told ABC News. “Just like bitcoin, we have seen breakouts in cryptocurrency markets.”
The boom in digital assets appears to reflect investor enthusiasm for Trump, who has pledged to strengthen the cryptocurrency sector and ease regulations enforced by the Biden administration, experts told ABC News.
In July, Trump told audiences at a cryptocurrency conference in Nashville, Tennessee, that he wanted to make the United States the “cryptocurrency capital of the world.”
Trump has promised to weaken federal oversight of cryptocurrency and create the federal government’s first National Strategic Bitcoin Reserve.
Trump also said he would replace Securities and Exchange Commission Chairman Gary Gensler, who many crypto supporters dislike because of his robust approach to crypto regulation.
“Crypto has evolved a lot since the election, and to me that’s due to the changing regulatory environment,” said Bryan Routledge, professor of finance at Carnegie Mellon University’s Tepper School of Business, at ABC News.
Cryptocurrency price growth on Monday far outpaced the performance of the U.S. stock market. At the start of the session, the SThe &P 500 rose 0.25%, while the Dow Jones Industrial Average climbed 0.75%, or about 330 points. The tech-heavy Nasdaq rose just 0.1% in early trading Monday.
The sharp rise in bitcoin prices marked a breakthrough for the world’s largest cryptocurrency. However, the recent rise follows a period of exceptional returns dating back to last year. The price of bitcoin has risen 122% since November 2023.
Former President Donald Trump speaks at the Bitcoin 2024 conference in Nashville, July 27, 2024.
Brett Carlsen/Bloomberg via Getty Images
Those gains were spurred in part by the U.S. approval in January of Bitcoin ETFs, or Exchange-Traded Funds. Bitcoin ETFs allow investors to purchase an asset that tracks the price of Bitcoin, while avoiding the hassle and risks of purchasing the crypto coin itself.
“If you look at how much the price of Bitcoin has moved over the last year, last week’s rise is a bit staggering, but the rise over the last year has been five times more staggering,” Routledge said.
The crypto industry entered this year bruised after a series of high-profile collapses and corporate scandals.
FTX, a multibillion-dollar cryptocurrency exchange co-founded by Sam Bankman-Fried, collapsed in November 2022. The implosion sparked a 17-month legal saga that culminated in Bankman-Fried’s conviction for fraud. In April, Bankman-Fried was sentenced to 25 years in prison.
Changpeng Zhao, founder and former CEO of leading cryptocurrency exchange Binance, was sentenced to four months in prison in April after pleading guilty to charges that his platform enabled illicit financial activities.
The cryptocurrency’s prolonged rally in recent years has been remarkable, but it also comes amid the volatility that has characterized digital assets since bitcoin’s inception in 2009, said David Yermack, a finance professor at New York University’s Stern School of Business, to ABC News. .
“It can go down and up very, very quickly,” Yermack said. “It’s extraordinarily volatile.”
Cryptocurrencies are likely to remain highly volatile even if Trump eases regulations, experts say.
Since cryptocurrency has not been widely adopted as a way to facilitate trade, the asset primarily serves as a store of value, similar to gold, Routledge said. These assets sometimes show large increases in value due to a favorable economic environment, but they also carry significant risks, Routledge said.
“We don’t use cryptocurrency to buy coffee,” Routledge said. “It serves as digital gold. These types of assets tend to be quite volatile.”
