Bitcoin hovers near $100,000 as post-election highs continue. Here’s what to know.
Bitcoin topped $98,000 for the first time on Thursday, extending a run of all-time highs set almost daily since the U.S. presidential election. The cryptocurrency has surged more than 40% in just two weeks.
Now that Bitcoin is approaching $100,000, investors don’t appear to be fazed by gravity or any cautionary tales from the cryptocurrency’s history of volatility.
Cryptocurrencies and related investments such as cryptocurrency exchange-traded funds have risen on expectations that the incoming Trump administration will be more “crypto-friendly” than the outgoing Biden administration.
Bitcoin was trading at $96,747 as of 11:02 a.m. ET, after previously rising to $98,349, according to CoinDesk.
However, the cryptocurrency market is still a wild place and it’s impossible to know what will happen next. While some are bullish, other experts warn of investment risks.
Here’s what you need to know.
Cryptocurrencies have been around for a while, but have gained traction in recent years.
Fundamentally, cryptocurrencies are digital currencies. The currency is designed to operate through an online network with no central authority – meaning it is generally not backed by any government or banking institution – and transactions are recorded via a technology called blockchain.
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 cryptocurrency as a “digital alternative” to traditional currencies, but it can be very volatile and its price depends on larger market conditions.
Trump’s election victory boosts cryptocurrencies
Many of the recent actions are related to US election results.
President-elect Donald Trump has been critical of digital currencies, During his campaign he promised Oppose Vice President Kamala Harris to making the U.S. the “cryptocurrency capital of the planet” and creating a Bitcoin “strategic reserve.” His campaign accepts cryptocurrency donations and attracted fans at a Bitcoin conference in July. He also founded World Liberty Financial with his family members to engage in cryptocurrency trading.
Crypto industry players welcomed Trump’s victory, hoping he would push for legislative and regulatory changes they have long lobbied for. Trump has also pledged to oust SEC Chairman Gary Gensler if elected. Gensler has been leading the U.S. government’s crackdown on the cryptocurrency industry and has repeatedly called for greater regulation.
Spot Bitcoin ETF
Digital assets like Bitcoin saw significant gains in the months leading up to the election, largely due to the early success of a new way to invest in the asset: Spot Bitcoin ETF, It received approval from U.S. regulators in January.
Spot Bitcoin ETFs allow investors to invest directly in Bitcoin without holding Bitcoin. Unlike regular Bitcoin ETFs, which have Bitcoin futures contracts as the underlying asset, the underlying asset of spot Bitcoin ETFs is Bitcoin. Each spot Bitcoin ETF is managed by a company that issues its own shares of Bitcoin that are purchased through other holders or through authorized cryptocurrencies exchange. These stocks are listed on traditional stock exchanges.
Citi analysts David Glass and Alex Saunders wrote in a research note two weeks ago that inflows into spot ETFs “have been a major driver of Bitcoin returns for some time, and we expect this relationship to continue in the near term. Go down”. They added that spot crypto ETFs saw their largest inflows on record in the days following the election.
Bitcoin volatility
History shows that you can make money in cryptocurrency as fast as you can. Long-term price action depends on larger market conditions. Trading takes place around the clock, every day.
At the start of the COVID-19 pandemic, Bitcoin price was just above $5,000. By November 2021, its price climbed to nearly $69,000, a time when demand for the technology asset was high. Bitcoin later plummeted during a series of aggressive rate hikes by the Federal Reserve aimed at curbing inflation. The collapse of FTX in late 2022 severely undermined overall confidence in cryptocurrencies, with Bitcoin falling below $17,000.
As inflation begins to cool, investors are returning in droves—and Earnings soar On the expectations and early success of spot ETFs. Experts still emphasize caution, especially for investors with limited financial resources.
How Bitcoin Mining Works
Assets like Bitcoin are produced through a process called “mining,” which consumes large amounts of energy. Operations that rely on polluting sources have raised particular concerns over the years.
A recent study published by the United Nations University and Planet Future magazine found that the carbon footprint of Bitcoin mining in 76 countries in 2020-2021 was equivalent to the emissions of burning 84 billion pounds of coal or operating 190 natural gas power plants. Coal meets the majority of Bitcoin’s electricity needs (45%), followed by natural gas (21%) and hydropower (16%).
The environmental impact of Bitcoin mining depends largely on the energy used. Industry analysts insist that the use of clean energy has increased in recent years, along with growing calls for climate protection.
