Bitcoin's Surge and Future Outlook
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Bitcoin recently reached new heights, briefly touching $106,509, a new all-time high, before returning to $106,420.08 as of Monday, representing a 3% increase on the day, according to Coin Metrics.(1)
The recent price action is partly driven by speculation surrounding the Federal Reserve's next move. With a two-day policy meeting concluding this Wednesday, December 18, many investors are anticipating an interest rate cut, with the CME FedWatch Tool currently forecasting a 96% chance of a 25-basis-point reduction.(1)
This anticipated rate cut is seen as a positive for Bitcoin, as lower interest rates typically favor similar assets. A cut could also lead to a weakening dollar and a growing money supply, both of which have historically had correlations with Bitcoin’s price movements.(1)
At the time of writing, Bitcoin is up nearly 8% for the month, 50% since the U.S. presidential election, and 145% year-to-date. Some of this growth can be attributed to the market's optimism surrounding a friendlier regulatory environment, along with speculation that a strategic bitcoin reserve could be established under the incoming Trump administration.(1)
Bitcoin and the Trump Administration
Bitcoin’s recent surge coincided with developments in the U.S. political landscape. Since the U.S. presidential election on November 5, Bitcoin's value rose from $69,374 to above $106,000.
Donald Trump, who was previously skeptical of digital assets, has now embraced the potential of cryptocurrencies, pledging to make the U.S. the “crypto capital of the planet.”(2)
Trump's campaign accepted cryptocurrency donations, and he has actively courted the crypto community, speaking at a Bitcoin conference earlier this year.(2)
He has also launched a new venture, World Liberty Financial, focused on trading cryptocurrencies with family members.(2)
Bitcoin's price fluctuations are well-known, and its relatively young status in the market means that long-term adoption is still uncertain. Additionally, the environmental effects of Bitcoin mining, which requires substantial energy consumption, remains a topic of debate.(2)
Trump Nominates Cryptocurrency Advocate Paul Atkins as SEC Chair
President-elect Donald Trump announced on December 4 that he intends to nominate cryptocurrency advocate Paul Atkins to chair the Securities and Exchange Commission.3
Atkins, current CEO of Patomak Partners and a former SEC commissioner, has made the case against “too much market regulation.”(3)
Trump, once a crypto skeptic, has pledged to make the U.S. “the crypto capital of the planet” and create a “strategic reserve” of bitcoin.(3)
Article Sources:
(1) Macheel, Tanaya. “Crypto World Bitcoin rises to new record above $106,000 ahead of this week’s Fed decision.” CNBC, December 15, 2024.
(2) Grantham-Philips, Wyatte. “Bitcoin has surpassed the $100,000 mark as the post-election rally continues. What’s next?” AP News, December 5, 2024.
(3) Veiga, Alex. “Trump nominates cryptocurrency advocate Paul Atkins as SEC chair.” AP News, December 4, 2024.