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Bitcoin exceeds $100,000 for the first time

For the first time, Bitcoin cost more than $100,000. During the night, the price of the most famous cryptocurrency jumped sharply and broke the round mark – also because of Donald Trump's election victory.

A good 16 years after Bitcoin was founded, the cryptocurrency reached a value of $100,000 for the first time. The oldest and best-known digital currency climbed sharply on the financial markets last night and broke one record high after another. In the meantime the price was at $103,620; in the early morning it was slightly lower at around $102,600.

Since the beginning of the year, the value of the digital currency has more than doubled. The market capitalization of Bitcoin is now more than two trillion dollars. For comparison: at the beginning of 2024 it was still under $900 billion. Bitcoin therefore dominates the market of just over 10,000 cryptocurrencies. The provider Coinmarketcap.com estimates the market capitalization of all digital currencies at almost $3.7 trillion.

“Trump effect” in the crypto market

Since the US presidential election on November 4th alone, Bitcoin has increased by almost 50 percent. After Donald Trump's victory, investors expect a crypto-friendly US government and more lax regulations. While measures to regulate cyber currencies have often been considered in the past, Trump has announced that he wants to make the US the “crypto center of the planet.”

During the night, the party mood in the crypto scene was further fueled by Trump's announcement that he would make crypto advocate Paul Atkins his preferred candidate as head of the powerful US Securities and Exchange Commission (SEC). The previous SEC Chairman Gary Gensler was known for his tough stance towards digital currencies. Gensler announced on November 21 that he would step down from his post when Trump moved into the White House in January.

For many crypto investors, Gensler was a red flag. Under his leadership, the SEC generally enforced strict rules for digital currency transactions and cracked down on crypto fraud cases. Trump emphasized Atkins' crypto affinity on his social media platform Truth Social: “He also recognizes that digital assets and other innovations are critical to making America greater than ever before.”

Is the US government actively buying Bitcoins?

If Atkins actually becomes SEC boss, experts expect that more crypto ETFs will be approved. So far there are only Bitcoin and Ether as ETFs in the USA. The abbreviation ETF stands for Exchange Traded Funds, which means exchange-traded index funds. In addition, many investors hope that the new US government under Trump will invest in Bitcoin as a counterweight to the state gold reserve. The USA owns over 8,100 tonnes of the precious metal, worth around $670 billion, making it the largest known gold investor in the world.

During the election campaign, however, it remained unclear whether Trump simply wanted to accumulate Bitcoin holdings confiscated from criminals in a crypto reserve or whether his government would actively buy Bitcoins. Republican Senator Cynthia Lumis from the US state of Wyoming, who is considered a confidant of Trump, had proposed purchasing a total of one million Bitcoins over a period of five years and holding them for at least 20 years. Since the maximum quantity is limited to 21 million pieces, that would be almost 4.8 percent of the total Bitcoin holdings.

Experts see the investment strategy of the US company MicroStrategy as another reason for the increase in value. Company boss Michael Saylor is considered a “hardcore Bitcoiner” and has so far acquired the equivalent of around $32 billion in the digital currency with money from corporate bonds. MicroStrategy recently announced that it would raise $2.6 billion in new debt. The debt is raised through the issuance of so-called convertible bonds and is reserved for institutional investors. MicroStrategy wants to invest the fresh capital in Bitcoin.

Play with that “Object of speculation Bitcoin”

The recent price increase was also contributed by the fact that, following the approval of Bitcoin ETFs in the USA at the beginning of January, it is now also possible to trade Bitcoin options, i.e. to bet on the further course of the price. This means that larger investors in particular can protect themselves against falling prices when investing in Bitcoin. To do this, you typically use so-called put options, meaning you place a bet on falling prices for little money. This has been possible since Wednesday. In addition, bets on rising prices, so-called call options, can be used as another vehicle to bet on higher Bitcoin prices with even greater risk.

On the first day of trading, options worth almost two billion dollars were traded on BlackRock's Bitcoin ETF alone. 82 percent of investors bet on rising prices (calls), only 18 percent bet on falling prices. Many private investors who previously avoided Bitcoin are now asking themselves whether they have missed a lucrative trend. Crypto influencers like Roman Reher, who runs the Bitcoin channel “Blocktrainer” on YouTube, repeatedly say that it is never too late to get started with Bitcoin. Despite major fluctuations, the Bitcoin price only knows one direction in the long term, namely upwards.

However, consumer advocates warn against becoming infected by crypto fever. According to the consumer advice center, no one can reliably predict whether Bitcoin, variants of it or other cryptocurrencies will become established as an alternative to conventional monetary systems in the medium term. “The development in recent years has increasingly moved away from the idea of ​​an alternative means of payment and towards an object of speculation.”

Consumer advocates see several risks: massive price fluctuations up to total loss and the lack of security systems. Therefore, Bitcoin is not recommended as an investment for consumers. In addition, cryptocurrencies consume enormous amounts of electricity due to the associated computing power, which is why critics view them as harmful to the climate.

Samir Ibrahim, HR, tagesschau, December 5th, 2024 8:31 a.m

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