Bitcoin Approaches the $100,000 Threshold as the Post-Election Surge Continues

NEW YORK — On Thursday, Bitcoin reached above $98,000, setting a new benchmark and continuing its rapid ascent, which has seen more than a 40% increase in the past two weeks, spurred by the U.S. election outcomes. The digital currency has consistently hit record highs since the presidential vote.

Bitcoin is now on the cusp of crossing the $100,000 threshold, with investors showing little concern for the traditional volatility associated with cryptocurrencies.

Speculation in cryptocurrencies and connected investment vehicles like crypto exchange-traded funds has intensified as the Trump administration, believed to be supportive of digital assets, prepares to take office following the Biden presidency.

As recorded around 10 a.m. ET, Bitcoin’s trading value was $97,014, after peaking at $98,349, as per CoinDesk data.

The nature of cryptocurrency markets remains unpredictable, and forecasts about its future moves are uncertain. While optimism persists, experts continue to caution about the potential investment risks.

Here’s what’s important to understand.

Cryptocurrency has been in existence for years now but has recently garnered significant attention.

Cryptocurrency, essentially digital currency, operates independently of a central bank or government and is based on blockchain technology for transaction recordings.

Bitcoin stands as the most recognized and earliest form of cryptocurrency, but others like Ethereum, Tether, and Dogecoin have also gained notoriety. Investors sometimes see cryptocurrencies as a digital substitute for conventional currencies, but they can experience dramatic volatility based on broader market dynamics.

The recent climb in cryptocurrency has been linked to the aftermath of the U.S. presidential election.

Prior to the election outcome, crypto assets experienced growth, yet the pronounced surge seen post-election suggested the market had not entirely anticipated a Republican win, as reported by Kaiko analysts in their November 14 research.

Crypto enthusiasts have embraced Trump’s reelection, hopeful for the enforcement of legislative and regulatory changes they have long advocated. Generally, the industry seeks legitimacy without excessive restrictions.

Trump, who previously expressed skepticism about crypto, has pledged to establish the U.S. as the “crypto capital of the world” and to form a strategic reserve of Bitcoin. He accepted crypto donations during his campaign and engaged with the crypto community at a Bitcoin conference. Trump also launched World Liberty Financial, a new crypto-focused venture with his family members.

He has also stated intentions to replace SEC Chair Gary Gensler if reelected, given Gensler’s stringent stance on crypto industry regulations and calls for increased oversight.

The full impact of these developments is yet to unfold. According to Citi bull macro strategist David Glass, it remains to be seen whether new regulations will rely on enforcement, as has been the trend, or on new legislation.

“The crypto story is likely a longer-term narrative,” David Glass commented to The Associated Press. “And it’s unclear how rapidly U.S. crypto policies can influence broader adoption.”

Digital assets like Bitcoin had already been on an upward trajectory thanks to the approval of spot bitcoin ETFs by U.S. regulators in January. These ETFs have since become a significant force behind Bitcoin’s valuation.

Post-election, spot ETFs experienced unparalleled inflows, contributing to Bitcoin’s momentum, as noted by Kaiko, with $6 billion traded in the election week alone.

Additionally, Bitcoin underwent its fourth “halving” in April, an event designed to diminish the reward for mining new Bitcoins. This reduction theoretically creates a “supply shock” if demand stays strong, potentially driving prices up in the long-term, though some analysts believe it may be premature to gauge such effects.

Still, the volatile nature of crypto means gains can dissipate as fast as they are made. Market conditions dictate long-term pricing, and trading happens continuously.

At the onset of the COVID-19 pandemic, Bitcoin’s price was slightly above $5,000. It soared to close to $69,000 by November 2021, then plummeted below $17,000 following the FTX collapse and the Federal Reserve’s aggressive interest rate hikes to tackle inflation. As inflation began to ease, investors returned en masse, with spot ETFs playing a significant role in the rapid price increase. Nevertheless, experts urge caution, especially for retail investors.

The production of assets like Bitcoin, known as “mining,” is energy-intensive. Mining operations that depend on polluting energy sources have come under scrutiny.

Recent research from the United Nations University and Earth’s Future journal reported that the carbon emission from Bitcoin mining in 76 countries during 2020-2021 was equivalent to the CO2 released from burning 84 billion pounds of coal or operating 190 natural gas-fired power plants. Most of Bitcoin’s electricity demands were met by coal (45%), followed by natural gas (21%) and hydropower (16%).

Bitcoin mining’s environmental impact is largely determined by the kind of energy used, with industry analysts asserting that the use of cleaner energy has been on the rise, paralleling the increased calls for environmental protection.