Bitcoin hit a record high above $106,000 Monday after President-elect Donald Trump proposed the creation of a US bitcoin strategic reserve, similar to the country’s strategic oil reserve, fueling optimism among crypto enthusiasts.
Bitcoin price soars
Bitcoin, the world’s leading cryptocurrency, was up 2% to reach a high of $106,449 in early trading on Monday before easing to $104,711 around 7:31 a.m. AST, according to CoinMarketCap. Smaller cryptocurrency ethereum rose 1.6% to $3,954 around the same time.
“We’re in blue sky territory here,” Tony Sycamore, an analyst at IG, told Reuters. “The next figure the market will be looking for is $110,000. The pullback that a lot of people were waiting for just didn’t happen, because now we’ve got this news.”
Last Friday, investor sentiment was further boosted by MicroStrategy’s inclusion in the tech-heavy Nasdaq 100 index, which is expected to drive more inflows to the software firm turned bitcoin buyer.
Bitcoin and the broader crypto market have gained significant attention as investors anticipate a more favorable regulatory environment under the incoming Trump administration, boosting optimism around the digital currency. Bitcoin has surged 147% year-to-date, according to Forbes Middle East calculations.
“We’re gonna do something great with crypto because we don’t want China or anybody else – not just China but others are embracing it – and we want to be the head,” Trump told CNBC last week. When asked if he plans to build a crypto reserve similar to oil reserves, Trump said: “Yeah, I think so.”
Russia’s bitcoin reserve
Similarly, Russian lawmakers are reportedly pushing for the country to create a bitcoin strategic reserve.
Russian state-owned news agency RIA Novosti reported that State Duma deputy Anton Tkachev has proposed creating a Russian strategic bitcoin reserve, claiming to have obtained a copy of the document. New People Party’s Tkachev reportedly sent the proposal to Russia’s finance minister, Anton Siluanov, to “assess the feasibility of creating a strategic reserve of bitcoin in Russia,” and comparing it to “state reserves in traditional currencies.”
“If this initiative is approved, I ask you to submit it to the government of the Russian Federation for further implementation,” the document reportedly read. “In conditions of limited access to traditional international payment systems for countries under sanctions, cryptocurrencies are becoming virtually the only instrument for international trade. The Central Bank of Russia is already preparing to launch an experiment in cross-border settlements in cryptocurrency.”
“A legitimate question: why accumulate reserves if they can be lost so easily?” Putin said in remarks at an investment conference reported by Reuters, calling bitcoin a potential solution. “For example, bitcoin, who can prohibit it? No one. Because they are new technologies. And no matter what happens to the dollar, these tools will develop one way or the other because everyone will strive to reduce costs and increase reliability.”
Russia has taken steps to enable the use of bitcoin and cryptocurrencies for transactions in response to crippling financial sanctions. Additionally, Putin signed a new law legalizing bitcoin and cryptocurrency mining in the country. China, the UK, Bhutan and El Salvador are the other countries with significant amount of bitcoins, data site BitcoinTreasuries showed.
Big number
As of July 29, 2024, governments worldwide held 2.2% of bitcoin’s total supply, equivalent to 471,380.6 BTC, valued at $32.7 billion. The US held more than 213,000 BTC, according to CoinGecko.
Speculative asset
US Federal Reserve Chair Jerome Powell compared bitcoin to gold earlier this month. “People use bitcoin as a speculative asset,” Powell told CNBC’s Andrew Ross Sorkin during the New York Times’ DealBook Summit. “It’s just like gold, only it’s virtual, it’s digital. People are not using it as a form of payment or as a store of value. It’s highly volatile. It’s not a competitor for the dollar, it’s really a competitor for gold.”
Meanwhile, analysts noted to Reuters that any reserve for bitcoin move would take time to implement. “I think we still need to be cautious on a BTC strategic reserve, and at least consider that this is not likely to happen anytime soon,” Chris Weston, head of research at Pepperstone, told Reuters.
