Bitcoin hit a new record high of US$107,554 on December 16 following growing interest in Bitcoin as a potential reserve asset.
The speculations were spurred by a statement from US President-elect Donald Trump about creating a strategic reserve for cryptocurrencies.
He further emphasized his administration’s intention to explore a Bitcoin reserve to strengthen the US position in the global cryptocurrency landscape.
The prospect of Bitcoin gaining reserve asset status has fueled institutional interest in the digital currency. Data from CoinShares showed that digital asset investment products saw US$3.2 billion in inflows last week, marking 10 consecutive weeks of gains.
Bitcoin products, including exchange-traded funds (ETFs), accounted for US$2 billion of these inflows, while Ethereum investment products attracted US$1 billion.
According to CoinShares, global Bitcoin ETFs now manage over US$135 billion in assets, reflecting heightened institutional adoption.
Market observers and analysts have presented mixed projections for Bitcoin’s future following the statements.
Bernstein analysts forecast Bitcoin reaching US$500,000 by 2029 and US$1 million by 2033, driven by the adoption of regulated Bitcoin ETFs.
However, skeptics argue that Bitcoin’s volatility and lack of stability compared to traditional reserves like gold or government bonds remain significant barriers.
Chris Weston, head of research at Pepperstone, cautioned against overly optimistic expectations, stating that implementing a strategic Bitcoin reserve would require strategic planning and communication.
Worldwide, governments have started accumulating Bitcoin as part of their reserve strategies.
As of July, global governments held 2.2 percent of Bitcoin’s total supply, with the United States owning nearly 200,000 Bitcoin worth over US$20 billion. Other significant holders include China, the UK, Bhutan and El Salvador.
Since the US election on November 5, Bitcoin’s price has gained more than 50 percent, with the cryptocurrency’s total market capitalization nearing US$3.8 trillion.
Trump’s pro-crypto stance during his campaign and subsequent announcements have contributed to growing confidence in the sector.
Additionally, pro-crypto Washington attorney Paul Atkins is expected to lead the Securities and Exchange Commission under Trump’s administration.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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