On Monday (December 16), buoyed by President-elect Donald Trump's reiteration of plans to establish a 'Bitcoin Strategic Reserve' similar to the U.S. Strategic Petroleum Reserve, Bitcoin's historic rally broke through $107,000, further igniting enthusiasm among cryptocurrency investors.
Meanwhile, the Nasdaq operator announced that MicroStrategy (MSTR.O) will be included in the technology-heavy Nasdaq 100 Index. This news is expected to bring more capital inflow to the software company, which has transformed into a Bitcoin buyer, further driving up its stock price.
Bitcoin, the world's largest cryptocurrency, surged to an intraday high of $107,793.07 on Monday, with the latest quote at $105,957.38.
IG analyst Tony Sycamore stated: 'We have entered the 'blue sky zone,' and the next market focus is the number $110,000. The pullback many anticipated has not occurred, as this news from Trump has changed market expectations.'
Trump Promotes Policy Friendliness, Bitcoin Market Benefits
The Bitcoin and cryptocurrency markets have become a focal point, with investors betting that the incoming Trump administration will create a more favorable regulatory environment, enhancing market sentiment towards this alternative currency. By the end of 2024, Bitcoin prices have risen by approximately 150%.
Last week, Trump told CNBC: 'We are going to do great things with cryptocurrency because we don’t want other countries to get ahead of us.' When asked whether he plans to establish a cryptocurrency reserve similar to the oil reserve, Trump replied: 'Yes, I think so.' He expressed similar views earlier this year.
According to data provider CoinGecko, as of July, governments around the world hold 2.2% of the total Bitcoin supply. The U.S. holds nearly 200,000 Bitcoins, valued at over $20 billion at current prices.
Global Competition for Cryptocurrency Strategic Reserves
Other countries are also considering establishing cryptocurrency strategic reserves.
Nevertheless, there are skeptics in the market. Federal Reserve Chairman Jerome Powell compared Bitcoin to gold this month, stating that its primary use is as a store of value. Additionally, analysts pointed out that plans like the 'Bitcoin Strategic Reserve' may take a long time to implement.
Chris Weston, head of research at Pepperstone, stated: 'I believe we still need to be cautious about Bitcoin strategic reserves, at least considering that this may not materialize in the short term.' He added: 'Of course, any comments from Trump suggesting this plan is progressing would provide a significant upward boost to the market, but the subsequent impacts of this plan need to be carefully considered and clearly communicated to the market.'
Cryptocurrency Market Heat at Unprecedented Levels
Since Trump's election on November 5, Bitcoin prices have risen by over 50%. According to CoinGecko, the total market capitalization of cryptocurrencies nearly doubled this year, reaching a record $3.8 trillion.
Trump had previously criticized cryptocurrencies, but during his campaign, he reversed his stance and supported digital assets, promising to make the U.S. the 'global cryptocurrency capital.' This month, Trump appointed former PayPal executive David Sacks as the White House Director of Artificial Intelligence and Cryptocurrency Affairs; Sacks is a close friend of Trump's advisor Elon Musk. Additionally, Trump stated that he would nominate pro-cryptocurrency Washington lawyer Paul Atkins as the chairman of the U.S. Securities and Exchange Commission (SEC).
MicroStrategy Drives Capital Recycling Effect
Last Friday, Nasdaq announced that MicroStrategy, led by Michael Saylor, will officially join the Nasdaq 100 Index before the market opens on December 23. As the world’s largest corporate holder of Bitcoin, the company’s stock has surged sixfold this year, with a market value approaching $94 billion.
Matthew Dibb, Chief Investment Officer of Astronaut Capital, noted that after being included in the Nasdaq 100 Index, investors will purchase MicroStrategy shares to track the broader index holdings, which will further drive up the company's stock price and allow for more Bitcoin purchases through debt and equity financing.
'While this inclusion is somewhat unexpected, many believe it could mark the beginning of a capital recycling effect, with the potential to drive up Bitcoin spot prices,' said Dibb.