Bitcoin rose on Tuesday, extending recent gains and briefly hitting record highs on sustained optimism over the potential for a Strategic Reserve under incoming U.S. President Donald Trump.
Crypto markets were also cheered by MicroStrategy being added to the Nasdaq 100 index, although overall gains petered out in anticipation of a Federal Reserve meeting this week.
Bitcoin rose 1.9% to $106,623.5 by 00:25 ET (05:25 GMT). The world’s biggest cryptocurrency hit a record high of $107,767.6 earlier on Tuesday.
Bitcoin boosted by Trump talk on strategic reserve, but questions persist
Bitcoin’s latest rally came largely after Trump raised the prospect of a Strategic Bitcoin Reserve, akin to the government’s petroleum reserve, during an interview with CNBC last week.
Trump had promised crypto-friendly regulations if elected, with his recent nominations for key cabinet and regulatory positions all harboring pro-crypto stances. But analysts have remained skeptical over the prospect for a Bitcoin reserve, especially on how it could be formed.
If Trump were to form the reserve through an executive order, he would have limited funding available from the Treasury to fund more Bitcoin purchases. A future administration could also rescind his order, dissolving the reserve.
The formation of a Bitcoin reserve akin to the Strategic Petroleum Reserve will require Congressional approval, Compass Point said in a recent research note.
While the Republicans do hold a majority in Congress, an elevated Federal deficit will mean that the government will have to dole out more deficit funding to purchase additional coins- a scenario that will likely be opposed by bipartisan lawmakers, given that trimming the fiscal deficit has become a contentious topic.
