Bitcoin briefly surpassed $93,000 on Thursday (November 14) as expectations of further interest rate cuts from the Federal Reserve and President-elect Trump's supportive stance on cryptocurrencies provided momentum for its rise.
The digital asset rose nearly 6% to a record high of $93,462 in U.S. trading, but failed to hold on to gains, retreating to around $90,000 as of Thursday morning. The broader cryptocurrency market oscillated between gains and losses in volatile trading.
Speculators are trying to judge whether Trump’s verbal support for the digital asset will continue to drive Bitcoin higher, even to $100,000, or whether there will be profit-taking on the 33% gain since the Nov. 5 U.S. election.
“After such a long rally, it is expected to see a shift in sentiment, leading to increased two-way flows,” Chris Weston, head of research at Pepperstone Group, wrote in a note. “Nonetheless, the trend for Bitcoin is still up, and I expect buyers to re-enter the market once the concentrated position liquidation is over and we will enter clearer market conditions.”
U.S. inflation data released on Wednesday matched analysts' expectations, prompting traders to further bet that the Federal Reserve will cut interest rates by another 25 basis points in December. Meanwhile, Trump's broader policy platform of tax cuts and protectionist tariffs has added complexity and could push up inflationary pressures in the future.
Trump promised to create a friendly regulatory framework for cryptocurrencies, establish a strategic reserve of Bitcoin, and make the United States a global center for the industry. Trump, once skeptical of cryptocurrencies, changed his attitude after digital asset companies promoted it during the campaign.
Questions remain about the feasibility of these commitments and a possible timeline for their implementation. While Trump and his Republican Party control every branch of government, matters of state, such as economic and fiscal policy, are likely to take precedence.
Billionaire Michael Novogratz, founder of cryptocurrency investment firm Galaxy Digital LP, said on Bloomberg TV that the probability of the United States having a strategic reserve of Bitcoin is low, but if it comes true, the price of Bitcoin could soar to $500,000.
The cryptocurrency rally is spreading to the financial sector, driving trading volume and inflows to peaks in U.S. bitcoin exchange-traded funds. Software company MicroStrategy Inc. is pushing the Bloomberg U.S. Convertible Bond Index toward its best month of the year as it adds bitcoin to its balance sheet.
