The price of Bitcoin reached a new all-time high on Wednesday, surpassing USD 93,400 in a session marked by investor enthusiasm following Donald Trump’s recent victory in the presidential election. Since election day, the value of the world’s largest cryptocurrency has increased by more than 30%. At the time of publication of this note, Bitcoin was trading around USD 90,900 according to data from Coinmarketcap.
Analysts link this rally to the so-called “Trump trade,” which is boosting multiple financial assets. After his victory, Trump raised expectations in the crypto market by suggesting that he could fulfill his campaign promises favorable to this sector. Among the president-elect’s proposals are the possible creation of a Presidential Advisory Council on cryptocurrencies and the dismissal of the current president of the Securities and Exchange Commission (SEC), Gary Gensler. In addition, there is speculation about the formation of a strategic national reserve of Bitcoin.
Ethereum, solana and dogecoin also benefit from the crypto rally
The sharp rise in the price of Bitcoin was not limited to the leading cryptocurrency. Others such as ethereum, solana and even the popular dogecoin also recorded significant increases. In particular, dogecoin saw a rally after Trump announced that Elon Musk, CEO of Tesla, and Vivek Ramaswamy, former presidential candidate, would be in charge of a new “Department of Government Efficiency,” ironically nicknamed DOGE.
Unlike other days in which movements in cryptocurrencies impacted actions related to the sector, this time the actions of crypto companies such as Coinbase and Robinhood did not accompany the upward trend of Bitcoin. In Wednesday’s session, Coinbase was down about 2%, while Robinhood was unchanged.
The optimism of the crypto market contrasts with the warnings of several analysts who continue to consider these assets as highly speculative investments. From UBS Global Wealth Management, the investment director for the Americas, Solita Marcelli, pointed out in a note cited by Yahoo Finance that, although Bitcoin and other cryptocurrencies are experiencing a boom, they remain high-risk operations. According to Marcelli, “we see crypto assets more as a speculative bet than as a strategic investment in portfolios.” He also warned that cryptocurrencies add significant volatility to any investment portfolio.
Three big drops and a slow recovery
Since 2014, Bitcoin has experienced three major drops of over 70%, according to UBS analysis. On average, recovery from these crashes took about three years. Despite the current bullish momentum, Bitcoin’s history of volatility continues to be a factor causing caution among more conservative investors. However, those betting on cryptocurrencies are confident that the more favorable regulatory environment under a Trump administration could provide new momentum in the long term.
Additionally, the proposal for a dedicated Presidential Advisory Council for the crypto sector, as well as the possible removal of Gary Gensler as SEC Chairman, could pave the way for more permissive regulation. Gensler, who was appointed by the previous administration, has taken a critical stance toward cryptocurrencies and promoted actions against several exchange platforms. This change in regulatory leadership could further encourage investors, who are already taking positions in a market that is aiming for a price of USD 100,000 per Bitcoin.
Despite the enthusiasm, Wall Street remains divided over the future of cryptocurrencies. Some traders project that if Trump’s pro-crypto policies materialize, Bitcoin could quickly surpass $100,000. However, other experts emphasize the intrinsic risks and warn that the market remains susceptible to abrupt changes.
The price behavior of Bitcoin and other cryptocurrencies has also had a differentiated impact on the related stock and bond markets. Despite the increase in the price of the digital asset, equity markets did not replicate the optimism. For their part, sovereign bonds in emerging markets, such as those of Argentina, continue their own trajectory influenced by local political and economic factors, without necessarily following the euphoria of the crypto sector.
Recent movements in the price of Bitcoin and enthusiasm around a more crypto-friendly regulatory framework coincide with growing interest from investors seeking to hedge against macroeconomic uncertainty. However, warnings about the speculative nature of these assets persist, with experts reminding investors of the need for caution in the face of potential market corrections.
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