Bitcoin, the flagship cryptocurrency, hit a new all-time high of $106,352 amid rumours that President-elect Donald Trump would set up a strategic Bitcoin reserve from Day one in office.
The crypto asset which has surged by 15.2% in the last seven days hit a peak at $106,352 before cooling off to $104,853 at the time of the report.
The surge recorded by the primary crypto asset comes against a general bull run kick-started by a Donald Trump victory back in November.
However additional factors like a prospective strategic reserve and Federal cut rates happening this week have helped the crypto asset hit a new all-time high for the second time this month.
Incoming Bitcoin Reserve
Donald Trump late last week in a CNBC interview confirmed that his administration is looking at a potential Bitcoin reserve for the United States.
The President-elect also stated his intention to spearhead the United States’ Dominance of the global crypto industry citing competitors like China lurking.
“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.
When quizzed on his plans to build a crypto reserve similar to oil reserves, Trump said: “Yeah, I think so.”
The idea of a Bitcoin reserve for the United States was first mentioned by Donald Trump at the Bitcoin 2024 conference in Nashville. At the conference, he likened the crypto industry to the steel industry when he was growing up and reiterated his resolve to make America the global captain of the crypto industry.
Federal rate cuts this week
A potential second factor behind the current Bitcoin surge is the Federal Reserve interest rate policy decision set to be announced on Dec 18.
The Fed will announce its next interest rate policy decision along with a release of Federal Open Market Committee projections.
The Fed Chair Jerome Powell will hold a press conference at 2:30 pm ET to announce new rate cuts which will be followed by the publication of the Fed statement.
Historically, Federal rate cuts have resulted in a price increase for Bitcoin due to various factors like increased liquidity and lower returns on traditional assets.
Federal rate cuts often lead to an increase in lending pumping more money into the economy. More money chasing a few assets leads to a surge in Bitcoin price due to high demand.
Similarly, lower interests following a rate cut reduce the yield on traditional assets forcing investors to seek alternatives with higher yields. Bitcoin is usually the choice at hand driving up its demand and leading to a price increase.
Bitcoin surpassed the psychological $100,000 price barrier this month following an impressive Number Bull run.
A new all-time high for the chief crypto asset points towards exciting things to come as Donald Trump looks to take office next month.