Bitcoin has surpassed the $US100,000 ($155,440) mark as Donald Trump’s election sparked a surge in the world’s most popular cryptocurrency. The milestone came hours after the president-elect signaled he would ease regulations on the cryptocurrency industry when he said he intended to nominate cryptocurrency advocate Paul Atkins as the next chairman of the US Securities and Exchange Commission. Bitcoin has surged to unprecedented heights since Trump won the election on November 5. The cryptocurrency climbed sharply from $US69,374 on Election Day and reached $US103,713 on Wednesday (AEDT Thursday), according to CoinDesk. Just two years ago, bitcoin fell below $US17,000 following the collapse of cryptocurrency exchange FTX.
Then-Republican presidential candidate Donald Trump speaks at the Bitcoin 2024 conference in Nashville, Tennessee, July 27, 2024. (AP Photo/Mark Humphrey, File) How long Bitcoin will stay above the $100,000 mark is uncertain. Early Thursday, the price of Bitcoin retreated to just below $102,000. As with everything in the volatile cryptocurrency space, the future is unpredictable. While some are bullish on future gains, other experts warn of investment risks. Here’s what you need to know.
Back up. What is cryptocurrency again?
Cryptocurrency has been around for a while. But you’ve probably heard about it more and more over the past few years. Fundamentally, cryptocurrency is digital money. It’s designed to work over an online network with no central authority – meaning it’s not usually backed by any government or banking institution – and transactions are recorded using blockchain technology.
Bitcoin hits new record of over $100,000 ($155,440). (9) Bitcoin is the largest and oldest cryptocurrency, although other assets such as Ethereum, Tether and Dogecoin have also grown in popularity over the years. Some investors view cryptocurrencies as “digital alternatives” to traditional currencies, but the vast majority of daily financial transactions are still conducted using fiat currencies such as the U.S dollar. In addition, Bitcoin can be very volatile, and its price is dependent on larger market conditions.
Why is bitcoin soaring?
Much of the recent action is tied to the outcome of the U.S presidential election. Trump, once a cryptocurrency skeptic, has pledged to make the U.S the “crypto capital of the world” and to build a “strategic reserve” of bitcoin. His campaign has accepted cryptocurrency donations and attracted a large following at a July bitcoin conference. He also co-founded World Liberty Financial, a new venture that trades cryptocurrencies, with his family.Crypto industry participants welcomed Trump’s victory, hoping that he would push for legislative and regulatory changes they have long lobbied for — generally, changes that aim to increase legitimacy without too much red tape. Trump took a step in that direction on Wednesday, saying he intends to nominate Paul Atkins to serve as chairman of the SEC. Atkins served as an SEC commissioner during President George W. Bush’s term. In the years since leaving the agency, Atkins has railed against too much market regulation. He joined the cryptocurrency advocacy group Token Alliance in 2017. Under current chairman Gary Gensler, the SEC has cracked down on the crypto industry, fining multiple companies for securities violations. But along the way, he has also faced criticism from industry insiders, such as Robinhood’s chief legal officer, who described Gensler’s approach to crypto as “rigid” and “hostile.” Gensler will step down after Trump takes office. Under Gensler, the SEC did take one crypto-friendly step by approving a spot bitcoin ETF, or exchange-traded fund, in January, which allows investors to own a stake in bitcoin without buying it directly. Spot ETFs were a major driver of bitcoin’s price before the election — but like much of crypto’s recent momentum, record inflows followed the election. Tiny detail on a 20-cent coin could make it worth hundreds of dollars View Gallery
What are the risks?
History shows that money can be made just as quickly as it can be lost in cryptocurrencies. Long-term price action depends on larger market conditions. Trading is done around the clock. At the start of the coronavirus pandemic, Bitcoin was trading just over $5,000. Its price climbed to nearly $69,000 in November 2021 amid high demand for technology assets, but later plunged during a series of aggressive rate hikes by the Federal Reserve. And FTX’s crash in late 2022 severely dented overall confidence in cryptocurrencies, with Bitcoin falling below $17,000. As inflation began to cool, investors began to return in droves – gains soared on expectations and early success of spot ETFs. But experts still emphasize caution, especially for small investors. And the Trump administration’s impending deregulation could mean less regulation. “I would say keep it simple. Don’t take on more risk than you can afford,” said Kaiko Research analyst Adam Morgan McCarthy, who also said there was no “magic eight ball” that knew exactly what would happen next.
What about the climate impact?
Assets such as Bitcoin are produced through a process called mining, which consumes a lot of energy. Operations that rely on polluting sources have been of particular concern over the years. Recent research published by the United Nations University and Earth’s Future magazine found that the carbon footprint of Bitcoin mining in 76 countries in 2020-2021 was equivalent to the emissions from burning 38 billion kilograms of coal or running 190 natural gas power plants. Coal meets most of Bitcoin’s electricity needs (45%), followed by natural gas (21%) and hydropower (16%). The environmental impact of Bitcoin mining is mainly due to the energy used. Industry analysts believe that the use of clean energy has increased in recent years, which coincides with the growing calls for climate protection .