NEW YORK (AP) — Bitcoin surpassed $100,000 for the first time this week as a massive rally in the world’s most popular cryptocurrency, largely accelerated by the election of Donald Trump, continues.
The cryptocurrency officially rose to six figures Wednesday evening, just hours after the president-elect said he intends to name cryptocurrency advocate Paul Atkins to be the next chairman of the Securities and Exchange Commission.
Bitcoin has soared since Trump won the US presidential election on November 5. The asset rose from $69,374 on Election Day to $103,713 on Wednesday, according to CoinDesk. And the latest all-time high comes just two years after bitcoin fell below $17,000 following the collapse of crypto exchange FTX.
Bitcoin fell back below $100,000 on Thursday afternoon, settling above $99,000 as of 4 p.m. ET. Even amid a massive rally that has more than doubled bitcoin’s value this year, some experts continue to warn of the risks of investing around the asset, which has a fairly volatile history.
Here’s what you need to know.
Backup. What is cryptocurrency anyway?
Cryptocurrency has been around for a while now. But chances are you’ve been hearing about it more and more in recent years.
Simply put, cryptocurrency is digital money. This type of currency is designed to operate through an online network without a central authority – meaning it is generally not backed by any government or banking institution – and transactions are recorded using a technology called blockchain .
Bitcoin is the largest and oldest cryptocurrency, although other assets like Ethereum, XRP, Tether and dogecoin have also gained popularity over the years. Some investors view cryptocurrency as a “digital alternative” to traditional currency, but most everyday financial transactions are still conducted using fiat currencies such as the dollar. Additionally, bitcoin can be very volatile, with its price dependent on broader market conditions.
Why is Bitcoin soaring?
Much of the recent action is linked to the outcome of the US presidential election.
Trump, who was once a crypto skeptic, has pledged to ensure that the U.S. “the crypto capital of the planet” and create a “strategic reserve” of bitcoin. His campaign accepted cryptocurrency donations, and he courted fans at a Bitcoin conference in July. He also launched World Liberty Financial, a new company with members of his family to trade cryptocurrencies.
On Thursday morning, hours after Bitcoin surpassed the $100,000 mark, Trump felicity “BITCOINERS” on its social media platform Truth Social. He also appeared to take credit for the recent gathering, writing: “YOU ARE WELCOME!!! »
Major crypto players welcomed Trump’s election victory last month, hoping that he would be able to push through the legislative and regulatory changes they have long pushed for – which, generally speaking, , aim for an increased sense of legitimacy without too much bureaucracy. And the industry has made considerable investments along the way. Last August, Public Citizen, a left-leaning consumer rights nonprofit, reported finding that crypto companies spent more than $119 million in 2024 to support pro-candidates. crypto in the federal election.
Trump made his latest pro-crypto move when he announced plans to nominate Atkins as SEC chair on Wednesday. Atkins was SEC commissioner under President George W. Bush. In the years since his departure from the agency, Atkins has argued against too much regulation of the market. He joined Token Alliance, a cryptocurrency advocacy organization, in 2017.
Under the current presidency of Gary Gensler, who will withdraw When Trump took office, the SEC cracked down on the crypto industry, penalizing a number of companies for violating securities laws. Gensler has also faced widespread criticism from industry players.
One crypto-friendly move the SEC made under Gensler was the January approval of bitcoin spot ETFs, or trading exchange funds, which allow investors to hold a stake in bitcoin without purchasing it directly. Spot ETFs were the dominant driver of Bitcoin’s price before Trump’s victory – but, like much of crypto’s recent momentum, they saw record inflows after the election.
What does Bitcoin hitting the $100,000 mark mean? Could it continue to climb?
Bitcoin surpassing the coveted $100,000 mark has left much of the crypto world in turmoil.
“What we are seeing is not just a rally, it is a fundamental transformation of bitcoin’s place in the financial system,” Nathan McCauley, CEO and co-founder of crypto custodian Anchorage Digital, said in a statement – while emphasizing growth. of those entering the market, especially with increasing institutional adoption.
Still, others note that new highs in Bitcoin’s price don’t necessarily mean the asset is going mainstream. The $100,000 level is “only a psychological factor and, ultimately, just a number,” wrote Dan Coatsworth, an investment analyst at British investment firm AJ Bell, in a statement released Thursday . comment.
That being said, bitcoin could continue to climb to higher and higher heights, especially if Trump follows through on his promises of more crypto-friendly regulation once in office. If Trump does indeed stockpile bitcoin, for example, changes in supply could also push the price higher.
“It’s hard to overstate how much Washington’s attitude toward crypto has changed after the election,” Matt Hougan, chief investment officer at Bitwise Asset Management, said via email Thursday, reiterating that prices could continue to increase if trends persist. “There’s a lot more demand than supply, and that’s generally a pretty good recipe for success.”
Yet, as with everything in the volatile cryptoverse, the future is never promised. Global regulatory uncertainties and environmental concerns surrounding Bitcoin “mining” – the creation of a new Bitcoin, which consumes a lot of energy – are among the factors that analysts like Coatsworth say could hamper future growth. And since it is still a relatively young asset with a history of volatility, its long-term adoption has not yet been completed.
Is it too late to invest? What are the risks?
Today’s excitement around bitcoin could inspire many people who aren’t already in the space to want to get in on the action. For those in a position to invest, Hougan says it’s not too late – pointing out that bitcoin is still in the early stages of its development and most institutional investors “still don’t have any exposure” .
At the same time, Hougan and others argue that it’s important to tread carefully and not bite off more than you can chew. Experts continue to stress caution about getting carried away with crypto “FOMO” or fear of missing out, especially for investors with smaller pockets.
“Many people have gotten rich from the skyrocketing value of cryptocurrency this year, but this high-risk asset is not for everyone,” Coatsworth noted Thursday. “It’s volatile, unpredictable and driven by speculation, none of which constitutes an overnight investment.”
In short, history shows that you can lose money in crypto just as quickly as you made it. Long-term price behavior is based on broader market conditions. Exchanges continue at all hours, every day.
Coatsworth points to a recent study by the Bank for International Settlements, a global organization of central banks based in Switzerland, which find that about three-quarters of retail buyers on cryptocurrency exchange apps likely lost money on their bitcoin investments between 2015 and 2022.
At the start of the COVID-19 pandemic, bitcoin stood at just over $5,000. Its price rose to nearly $69,000 in November 2021, during a period of high demand for tech assets, but then collapsed during an aggressive round of rate hikes by the Federal Reserve. And the collapse of FTX in late 2022 significantly undermined confidence in crypto as a whole, with bitcoin falling below $17,000.
Investors began to return in large numbers as inflation began to cool – and gains soared thanks to anticipation and then the early success of spot ETFs, and again, now to the post frenzy. -electoral. But lighter regulations from the incoming Trump administration could also mean fewer safeguards.
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This story has been corrected to refer to Anchorage Digital as a crypto custodian, not a crypto asset manager.
