Bitcoin has broken through the $100,000 psychological barrier on December 5, trading at around $102,605 at the time of writing. The milestone event has allowed the first cryptocurrency to achieve a market capitalization of over $2 trillion, underscoring its importance as the most coveted and valuable investment asset in history, surpassing even gold.
The rise in capitalization came on a protracted wave of Bitcoin’s gradual appreciation, which started sharply on November 6 after the announcement of the results of the presidential elections in the United States, which saw crypto-friendly candidate Donald Trump take the lead. Bitcoin then started its sharp appreciation, jumping from $68,000 to over $75,000 in mere hours.
Underpinning Reasons
The appreciation of Bitcoin to over $100,000 followed shortly after president elect Donald Trump announced on Wednesday that he had decided to nominate Paul Atkins to replace Gary Gensler as the new head of the US Securities and Exchange Commission. The choice of specialist to advice on cryptocurrency matters was lauded by the crypto community, since Atkins is a former federal regulator and is well known as an adviser of financial firms and cryptocurrency companies on legal matters pertaining to regulation
“Paul Atkins was made for this job,” as legal chief Dan Gallagher of Robinhood Markets Inc. commented on Trump’s decision.
The appointment followed a series of announcements made by leading US administration specialists regarding the nature of Bitcoin. The same day of Trump’s decision to appoint Atkins, Federal Reserve Chair Jerome H. Powell made a statement on the status of Bitcoin as an investment tool:
“People use Bitcoin as a speculative asset. It’s like gold, it’s just like gold, only it’s virtual, it’s digital. People are not using it as a form of payment or a store of value,” Powell stated.
“It’s highly volatile. It’s not a competitor for the dollar; it’s really a competitor for gold,” as he concluded.
The appointment of Atkins marks a diametric shift in the US government’s stance on cryptocurrencies, considering the negative attitude the Biden administration had taken against digital assets. The outgoing administration had taken considerable action against both select cryptocurrencies and crypto firms, as well as their founders, paying particular scrutiny to their persons and operations with crypto.
The new administration that Trump is assembling seems to be taking a proactive stance and is willing to embrace cryptocurrencies by partnering with the community of the industry instead. This step could be construed as a means of curbing illegal activities in the crypto sector through cooperation and collaboration, instead of enforcement and relying on legal crackdowns. In his earlier speeches during the election campaign, Trump had made numerous promises to ease crypto industry related regulation and attract companies from the sector to turn the US into the “crypto capital of the planet.” This step could lead to more crypto-friendly specialists being appointed to key roles in the incoming administration, especially regulatory authority posts. The deposition of Gary Gensler, a prominent opponent of crypto, in itself was enough to uplift investor sentiment in the crypto market.
The euphoria reigning on the crypto market at present can be best described as a consequence of anticipated administration change in the US. The optimistic outlooks of investors could, however, be misplaced if Trump backs down on his promises upon stepping into office in January. Investors are thus advised to curb their enthusiasm and hedge risks accordingly to suit any possible scenario and formulate exit strategies.
Companies closely related to cryptocurrencies, such as asset management firms and business software developers like MicroStrategy, have also welcomed Trump’s reshuffling of administration posts. This is especially true, considering that the company is known to be officially the largest Bitcoin holder in the United States as a publicly traded enterprise. The positive aspect is, however, more reserved for companies operating in United States Dollars, considering that Bitcoin has become inaccessible to most legal entities and individuals outside the US.
The Risks
While the market at large is celebrating Bitcoin’s milestone, there are risks involved and there is also regulation to take into account.
Trump’s crypto-friendly stance may turn out to be a business venture, considering that he has recently established World Liberty Financial – a company made up of his family members intended as a platform for trading cryptocurrencies. With that in mind, crypto enthusiasts who have long lobbied for regulation change could find themselves overboard or lacking legitimacy.
The current market situation could reverse at any moment, just as it had during the Covid-19 pandemic, which saw Bitcoin climb up to $69,000 in late 2021 just to plummet below $17,000 by late 2022 against the backdrop of the FTX exchange collapse. All crypto traders and experts stress the need for caution and selection of reliable business partners and platforms when operating with cryptocurrencies.
Work with the Pros
The new ATH of Bitcoin is a sure sign that a sharp rise in demand for crypto is inevitable market-wide. In order to stay ahead of the curb and catch the most profitable signals, it is imperative to work with the most reliable partners in the industry.
Entering on the lows is the first principle of crypto trade as the foundation of the concept of “buy low, sell high”. ChangeNOW gives individuals the ideal exchange venue for making swaps at the lowest possible commissions with Bitcoin and over 1,200 other digital currencies. Any kind of operation from swaps to buy and sell is available on ChangeNOW via a convenient and all-in-one interface.
Businesses accepting cryptocurrencies as means of payment from their clients using NOWPayments API will find it extremely profitable to have their operations routed through the service. Anything from 24/7 support in multiple languages to low commissions with instant processing will be available with the NOWPayments API for businesses.
Companies considering the option of attracting crypto clients should turn to ChangeNOW and connect the NOWPayments service to fast-track their operations with cryptocurrencies and create an instant point-of-service.
Takeaway
As Bitcoin strives up the price charts, crypto market participants are rallying to reap the profits. It remains to be seen whether Donald Trump will live up to his word and ease the administration’s stance on cryptocurrencies, but for now, his decision to appoint Atkins as head of the SEC is a step in the right direction that the market was hoping to witness.
While the market overheats, both individuals and businesses will find no better partner on the market than ChangeNOW for all their crypto operation needs.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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