Bitcoin surpassed $100,000 for the first time, boosted by “Trump pump” optimism surrounding the president-elect’s crypto-friendly policies.
The cryptocurrency, the largest by market value, rose to $102,510 on Dec. 5, marking a 45% increase since Trump’s election victory in early November. It is currently trading around $99,000.
Trump’s pro-crypto stance
In July 2024, during the Bitcoin 2024 conference in Nashville, Tennessee, Trump pledged to make the United States the “crypto capital of the planet.” In return, he received substantial financial support from figures in the cryptocurrency industry.
Elon Musk’s attitude towards cryptocurrencies has generally been one of enthusiasm for their potential. It has supported specific coins such as Bitcoin and Dogecoin. In early 2021, Tesla purchased $1.5 billion in Bitcoin and briefly accepted it as payment for vehicles. However, Bitcoin payments were suspended shortly after.
Recently, Trump announced plans to nominate cryptocurrency advocate Paul Atkins to be chairman of the Securities and Exchange Commission. Trump praised Atkins as a “proven leader for common-sense regulations.”
On his social media platform, Trump said: “Digital assets and other innovations are crucial to making America greater than ever.”
A “carnival atmosphere”
Jason Titman, CEO of cryptocurrency brokerage Swyftx, noted that global trading volumes are surpassing mid-pandemic levels. “The appointment of Paul Atkins as chairman of the SEC has only added to the carnival atmosphere,” he told Bloomberg.
Bitcoin’s historical growth also benefited from year-end trends. Kyle Rodda, senior analyst at Capital.com, highlighted Bitcoin’s year-end rallies, suggesting that the current surge could extend further under the new administration.
Critics
Warren Buffett called bitcoin a “gambling token.” “[Bitcoin] It has no value, but that doesn’t stop people from wanting to play roulette.”
Bill Gates commented that cryptocurrencies are “100%” based on a crazier theory.
Critics warn of environmental concerns arising from energy-intensive mining and the risk of regulation. In 2021, China declared all cryptocurrency transactions illegal.
The asset’s inherent volatility is also something investors need to be prepared for. On March 12, 2020, the price of Bitcoin dropped nearly 40% in a single day, due to COVID-19. In June 2017, Ethereum briefly dropped from $319 to $0.10 in a matter of seconds on GDAX (now Coinbase Pro) due to a large sell order and subsequent cascading stop-loss orders.
Regulation
Bitcoin’s rise above $100,000 is seen as a milestone towards mainstream acceptance. The cryptocurrency has suffered numerous crashes and “crypto winters”.
Australia’s stance on cryptocurrency is evolving, with regulators working to balance innovation with investor protection. The Australian Securities and Investments Commission has increased its oversight, proposing licensing requirements for cryptocurrency exchanges and companies promoting digital assets. This potentially includes treating stablecoins and some tokens as financial products, requiring compliance with rigorous regulatory standards.
In contrast to the US move towards cryptocurrency-friendly regulation, Europe is adopting a cautious stance. The European Union’s recently introduced Cryptocurrency Markets Regulation (MiCA) aims to mitigate the risks associated with cryptocurrencies. Fabio Panetta, governor of Italy’s central bank, has criticized crypto-assets like Bitcoin as speculative and volatile, with no “intrinsic value.”