Bitcoin Surges Amid Trump Presidency, Investors Eye New Records
Since Donald Trump’s election victory on November 5, Bitcoin (CRYPTO: BTC) has shown remarkable growth. The leading cryptocurrency has risen by 40% in just two weeks and is rapidly approaching a new all-time high. Currently, it is trading around $98,000, tantalizingly close to the significant $100,000 mark.
The big question investors are asking is: how much higher can Bitcoin go? With growing optimism related to Trump’s presidency, projections for Bitcoin prices may rise as we look toward 2025. Let’s explore further.
Trump’s Support for Cryptocurrency
The “Trump trade” represents a bet that many crypto-friendly proposals from Trump’s campaign will materialize during his presidency. These promises include establishing a supportive regulatory environment for cryptocurrencies, supporting the Bitcoin mining sector, and creating a strategic Bitcoin reserve.
A particularly noteworthy proposal is the strategic Bitcoin reserve envisioned by U.S. Senator Cynthia Lummis (R-Wyo.), which would involve the U.S. purchasing 1 million Bitcoins over the next five years—averaging 200,000 Bitcoins annually.
Another suggestion, made by Robert F. Kennedy Jr. earlier this year, advocates for the U.S. government to acquire 550 Bitcoins daily until it owns 20% of the total circulating Bitcoin supply.
Image source: Getty Images.
This anticipated buying pressure could significantly drive up Bitcoin prices, especially if other countries, such as China or Russia, also begin acquiring Bitcoin. An arms race for Bitcoin on a global scale might not be far off.
Spot Bitcoin ETFs Boosting Investment
Moreover, the introduction of spot Bitcoin ETFs has played a significant role in driving up Bitcoin’s value. Since their launch in January, investments have flowed in rapidly. The largest, the iShares Bitcoin Trust (NASDAQ: IBIT), has garnered over $40 billion in assets under management, surpassing the iShares Gold Trust, which has existed for nearly two decades.
It’s essential to note that hedge funds and major Wall Street firms have largely been the initial investors in these ETFs. Looking ahead, we might soon see more risk-averse institutional investors, such as pension funds, cautiously entering the market. Currently, many of these institutions might only allocate 1% of their portfolios to Bitcoin, but that amount could potentially increase over time.
This trend represents another potential source of buying pressure as we approach 2025. A cycle of rising Bitcoin prices could generate further excitement, attracting more investors and further propelling prices upwards—a self-reinforcing feedback loop that could continue as long as Bitcoin remains in high demand.
Potential Corrections Ahead
However, it prompts the question: should investors be cautious? Once Bitcoin surpasses the $100,000 threshold, profit-taking may lead to a significant pullback.
Critics might argue that the current optimism around Bitcoin is excessive. It raises valid questions regarding the Trump administration’s economic strategies. Will proposed tariffs on U.S. goods negatively affect Bitcoin? Can Trump’s team successfully implement the suggested strategic Bitcoin reserve?
On the positive side, a decline in Bitcoin’s price could provide an opportunity for those who have not yet invested but wish to take advantage of Bitcoin’s impressive 130% year-to-date growth.
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*Stock Advisor returns as of November 18, 2024
Dominic Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
