Dec 17 2024: Bitcoin surged on Tuesday, extending its upward momentum and briefly reaching new record highs amid growing speculation over the potential creation of a Strategic Bitcoin Reserve under incoming U.S. President Donald Trump
The cryptocurrency market also gained support from MicroStrategy’s addition to the Nasdaq 100 index, although broader gains were subdued ahead of the Federal Reserve’s meeting this week.
As of 00:25 ET (05:25 GMT), Bitcoin rose 1.9% to $106,623.5, after touching an all-time high of $107,767.6 earlier in the day.
Bitcoin Rises on Trump’s Reserve Proposal, Skepticism Remains
Bitcoin’s latest rally was largely driven by Trump’s comments last week in a CNBC interview, where he suggested creating a Strategic Bitcoin Reserve, similar to the government’s petroleum reserve.
Trump has maintained a crypto-friendly stance, promising supportive regulations if elected. His recent appointments for key cabinet and regulatory roles also reflect pro-crypto leanings. However, analysts remain cautious about the feasibility of such a reserve and the mechanisms to fund it.
If Trump were to establish the reserve through an executive order, funding would likely be limited to available Treasury resources. Moreover, a future administration could reverse the decision, dismantling the reserve.
According to Compass Point, forming a Bitcoin reserve akin to the Strategic Petroleum Reserve would require Congressional approval. While Republicans hold a Congressional majority, the soaring Federal deficit makes additional deficit spending for Bitcoin purchases contentious, with bipartisan opposition expected.
The recently proposed Bitcoin Act, which advocates for quarterly government purchases of Bitcoin, also faces slim chances of passing, Compass Point added.
The U.S. Department of Justice currently holds approximately 200,000 Bitcoins seized from criminal activities. While this stockpile could theoretically serve as a reserve, the implementation process remains uncertain.
Crypto Market Mixed as Fed Meeting Looms
Broader crypto markets showed a mixed performance, with risk appetite tempered ahead of the Federal Reserve’s policy decision this week. Despite the cautious sentiment, most altcoins retained recent gains driven by Bitcoin’s rally.
Ethereum, the second-largest cryptocurrency, rose 1.1% to $4,011.80, nearing its 2021 record high. XRP, the third-largest crypto, gained 3.7% to $2.4999.
However, major altcoins like Solana, Cardano, and Polygon each fell by more than 3%, while meme token Dogecoin slid 1.4%.
The Federal Reserve is widely expected to implement a 25 basis-point rate cut on Wednesday, but investor focus will be on the central bank’s outlook for future rate adjustments. Persistent inflation could prompt the Fed to signal a slower pace of monetary easing in 2025, suggesting higher interest rates may persist for longer. Such a scenario could weigh on cryptocurrency markets in the near term.
