Following President-elect Donald Trump's suggestion that he intends to establish a US bitcoin strategic reserve like to its strategic oil reserve, Bitcoin soared to a record high above $106,000 on Monday, igniting the excitement of cryptocurrency bulls.
The largest and most well-known cryptocurrency in the world, Bitcoin, peaked at $106,533 and was up 3.1% at $104,493 at 08:57 GMT. Ether, a smaller cryptocurrency, increased 1.2% to $3,952.
"We're in blue sky territory here," insisted IG analyst Tony Sycamore. "The market is going to be searching for $110,000 next. Because of this news, the retreat that many were anticipating simply did not occur.
The addition of MicroStrategy to the tech-heavy Nasdaq 100 index also improved investor mood, which is expected to result in more inflows for the software company that has now purchased bitcoin.
As investors bet that the next Trump administration will bring a more lenient regulatory environment, support for the alternative currency has increased, propelling Bitcoin and cryptocurrency into the public eye. This year, Bitcoin has increased 192%.
"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 said last week.
When questioned about his intentions to create a cryptocurrency reserve like to oil reserves, Trump responded, "Yeah, I think so."
According to data provider CoinGecko, as of July, governments worldwide owned 2.2% of the world's bitcoin supply, with the US holding close to 200,000 bitcoins, which are currently worth over $20 billion.
According to data from BitcoinTreasuries, the other nations with the largest bitcoin holdings are China, the United Kingdom, Bhutan, and El Salvador.
Cryptocurrency strategic reserves have also been considered by other nations.
Earlier this month, Russian President Vladimir Putin claimed that the current US government was utilizing the US dollar for political ends, eroding its status as the world's reserve currency and driving many nations to use alternative assets, such as cryptocurrency.
"For instance, who has the authority to ban bitcoin? "No one," Putin declared.
However, there are doubters; earlier this month, Federal Reserve Chair Jerome Powell compared bitcoin to gold. Analysts also note that putting such a plan into action will take time.
"I think we still need to be cautious on a BTC strategic reserve, and at least consider that this is not likely to happen anytime soon," Pepperstone research head Chris Weston stated.
"Of course, any comment from Trump that offers an increased degree of hope that plans for a strategic reserve is evolving are an obvious a tailwind, but this would come with consequences which would need to be carefully considered and well telegraphed to market players."
