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Nov 21, 2024 08:07 PM IST
During the poll campaign, Donald Trump projected himself as “crypto-friendly” and pledged to make the US the “bitcoin and cryptocurrency capital of the world”.
Bitcoin topped $98,000 for the first time on Thursday, continuing its momentum since the US presidential election results. The cryptocurrency’s value has rocketed more than 40% in just two weeks, news agency the Associated Press reported.
According to CoinDesk, Bitcoin traded at $97,594.85 as of 7.30 pm IST on Thursday. Cryptocurrencies and related investments have surged as investors seek to capitalise on expected gains from a “crypto-friendly” Donald Trump than the outgoing Biden administration.
Also read: US Dollar hits one-year high amid Donald Trump’s economic policies
Why is Bitcoin value soaring?
Trump’s favourable stance towards cryptocurrencies is expected to favour its growth once he assumes office in January 2025.
During his first term, Trump referred to cryptocurrencies as a “scam.” His move to cut corporate taxes during his first term brought more liquidity into the markets and drove more investments into high-growth assets such as cryptocurrency.
During the poll campaign, Donald Trump projected himself as a “crypto-friendly” candidate and even pledged to make the US the “bitcoin and cryptocurrency capital of the world”.
He also contemplated creating a “strategic reserve” of bitcoin. The soaring value of bitcoin convinced Trump to launch his new venture, World Liberty Financial, with family members to trade cryptocurrencies.
Trump promised to ensure the US federal government does not liquidate its crypto assets. He also promised to remove the chair of the Securities and Exchange Commission, Gary Gensler, who has been leading the US government’s crackdown on the crypto industry, repeatedly calling for more oversight.
Also read: Bitcoin churns near $90,000 after largest drop since US election
What are the risks of soaring Bitcoin?
Analysts told AP that long-term price behaviour will depend on market conditions in the future and warned of losing profits as quickly as one gained it.
A recent example of Bitcoin’s fall is during the COVID-19 pandemic. During the early days of the pandemic, bitcoin stood at just over $5,000. Its price climbed to nearly $69,000 by November 2021, when demand for technology assets peaked.
In late 2022, Bitcoin’s value fell aggressively to settle below $17,000, largely due to an aggressive series of Federal Reserve rate hikes to curb inflation. The collapse significantly undermined confidence in crypto overall and Bitcoin.
(With agency inputs)
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