Bitcoin crossed the threshold of US$90,000 ($126,000 CAD) on Wednesday for the first time in its history, with the cryptocurrency sector anticipating more flexible legislation and economic policies that would be favorable to it under the future Trump administration.
• Also read: Wall Street opens lower, catches its breath after new records
The largest cryptocurrency by capitalization exceeded this level around 2:30 p.m. GMT and continued its rise, exceeding $93,000 US dollars less than two hours later.
Since Donald Trump’s victory on November 5 in the US elections, the value of bitcoin has increased by more than 30%. After surpassing its record from last March, the digital currency rose above 80,000 US dollars on Sunday.
While Mr. Trump called cryptocurrencies a scam during his first term, he has since radically changed his position, even launching his own platform and certifying that he would make the United States “the bitcoin and cryptocurrency capital of the world.”
He also benefited from significant financial support from groups related to the world of cryptocurrencies during his campaign.
Initially thought of as a way to escape the control of traditional financial institutions, bitcoin is based on blockchain technology, which functions as a tamper-proof virtual ledger, keeping track of all transactions carried out.
Regulators have since sought to fill the legal vagueness surrounding this digital asset, which has experienced its share of controversies and is regularly stigmatized as a tool used by malicious actors to launder funds or even defraud individuals.
Regulation and strategic stocks
The American president-elect has for his part sworn to replace Gary Gensler, the boss of the financial markets watchdog, the SEC, hated by a sector which criticizes him for a repressive approach, and his choice to regulate cryptocurrencies like traditional financial securities.
“The fact that certain crypto assets escape the definition of financial securities could greatly accelerate the approval of new investment products and increase the influx of capital into the sphere” of digital currencies, says Simon Peters of eToro, interviewed by the AFP.
Stéphane Ifrah, analyst at Coinhouse, notes that many companies in the crypto world are in fact in favor of “MiCA-type regulation”, the European Union regulation, which notably provides for mandatory approval for service providers around digital assets, which “would make them run fewer legal risks” according to him.
In the United States, a bipartisan bill, known as FIT21, largely adopted by the House of Representatives in May, and currently on the Senate’s desk, plans to give control back to another financial regulator, the CFTC, as the approach more pragmatic and less dogmatic than the SEC.
Another flagship measure mentioned by Trump during his campaign is the establishment of a strategic national reserve of bitcoins.
To constitute it, the American government would undertake to no longer sell the bitcoins already in its possession, mainly seized in the context of legal cases, currently numbering around 210,000, or the equivalent of around 19 billion dollars at current prices, according to Simon Peters.
If such a project were to see the light of day, the United States could “potentially purchase bitcoins on the open market,” speculates the analyst, boosting demand and legitimacy for this digital asset.
Public plus large
As much as it is criticized by the sector, the SEC nevertheless gave the green light this year to the launch in the United States of bitcoin and then ether ETFs, financial products backed by the price of these two cryptocurrencies.
This investment vehicle allowed a wider audience to purchase bitcoins.
The twelve bitcoin-backed ETF funds listed in the United States currently hold the equivalent of approximately $94 billion, or more than 5% of bitcoins in circulation, and have earned more than $27 billion in bitcoins since their launch on January 11 , according to the SoSoValue website.
Finally, the price of bitcoin also soared at the start of the year due to “halving”, a technical event that reduces the supply approximately every four years, by halving the bitcoin reward granted to users (or “miners”) who operate this digital currency.
