Recently elected President Donald Trump reiterated his plan to establish a U.S. Bitcoin strategic reserve similar to the U.S. Strategic Petroleum Reserve, which has sparked enthusiasm among cryptocurrency bulls, with Bitcoin surging on Monday, breaking through $107,000.
MicroStrategy MSTR.O being included in the tech-heavy Nasdaq 100 index has also boosted investor sentiment, potentially bringing more capital inflows to this software company that has transformed into a Bitcoin buyer.
The world's largest and most well-known cryptocurrency, Bitcoin, continued its upward trend, briefly rising to an intraday high of $107,148, with the latest price at $106,877, up 5.43% from last Friday's close. The second-ranked cryptocurrency, Ethereum, rose 1.85% to $3,975.70.
IG analyst Tony Sycamore stated: "We are currently in an uncertain range. The next number the market is expecting is $110,000. Many were expecting a pullback, which did not happen because we are now getting this news."
As investors bet that the incoming Trump administration would bring a friendlier regulatory environment, Bitcoin and cryptocurrencies became the focus, boosting confidence in alternative currencies. By 2024, Bitcoin is expected to rise by about 150%.
Trump told CNBC late last week: "We are going to do some great things in the cryptocurrency space because we don’t want China or any other country—not just China, other countries—to accept cryptocurrencies. We want to be the leader."
When asked if he plans to establish a cryptocurrency reserve similar to the Strategic Petroleum Reserve, Trump said, "Yes, I think so." He advocated the same thing earlier this year.
According to data provider CoinGecko, as of July, governments around the world hold 2.2% of Bitcoin's total supply, with the U.S. holding nearly 200,000 Bitcoins, worth over $20 billion at current levels.
Data site BitcoinTreasuries shows that China, the UK, Bhutan, and El Salvador are other countries with significant Bitcoin holdings.
Other countries have also been considering cryptocurrency strategic reserves.
Russian President Vladimir Putin stated earlier this month that the current U.S. government uses the dollar for political purposes, undermining the dollar's status as a global reserve currency, forcing many countries to turn to alternative assets, including cryptocurrencies.
"For example, Bitcoin, who can ban it? No one can," said Putin.
However, some people are skeptical. Federal Reserve Chairman Jerome Powell compared Bitcoin to gold earlier this month. Analysts also pointed out that any such moves will take time to implement.
Chris Weston, head of research at Pepperstone, said: "I think we still need to be cautious about BTC strategic reserves, at least considering that this situation is unlikely to happen soon."
"Of course, anything Trump says that gets people more excited about the progress of the strategic reserve plan is clearly a positive, but it will also bring some consequences that need to be carefully considered and communicated to market participants."
Crypto promotion
Since the election of Trump and many other pro-crypto candidates on November 5, Bitcoin has surged more than 50%. According to CoinGecko, the total value of the cryptocurrency market has nearly doubled this year, reaching a new high of $3.8 trillion.
Trump previously referred to cryptocurrencies as a scam, but during the campaign, he embraced digital assets and promised to make the U.S. the 'cryptocurrency capital of the world.'
Trump appointed former PayPal executive David Sacks as White House director of artificial intelligence and cryptocurrency this month; Sacks is a close friend of Trump's advisor and major donor Elon Musk.
Trump also stated that he would nominate Washington lawyer Paul Atkins, who supports cryptocurrencies, to be the chairman of the U.S. Securities and Exchange Commission.
On Friday, exchange operator Nasdaq announced that MicroStrategy, led by CEO Michael Saylor, will be included in the Nasdaq 100 index, with this change taking effect before the market opens on December 23.
MicroStrategy is a major investor in crypto assets, with its stock price surging more than sixfold this year, reaching a market value of nearly $94 billion. It is now the largest corporate holder of cryptocurrency.
Matthew Dibb, chief investment officer of cryptocurrency asset management firm Astronaut Capital, stated that as part of the Nasdaq 100 index, investors will purchase MicroStrategy's stock to reflect the broader index's holdings, thus driving up the stock's value and allowing the company to purchase more cryptocurrencies through debt and stock issuance.
He said: "The inclusion seems a bit unexpected, but that hasn't dampened people's excitement. Many believe this is the beginning of a capital cycle that could push up Bitcoin's spot price."