Cryptocurrency Bitcoin has broken through the $US100,000 barrier for the first time, after a surge in value this year on the increasing promise of a Donald Trump presidency and a recent spike on its realisation.
The president-elect has promised to make the US the “crypto capital of the planet” and is setting about making decisions that will boost digital currencies, of which Bitcoin is the most dominant.
Overnight, he announced he intended to nominate cryptocurrency advocate Paul Atkins to chair the Securities and Exchange Commission (SEC), the US market regulator akin to the Australian Securities and Investments Commission (ASIC).
Donald Trump called Mr Atkins a “proven leader for common-sense regulations”.
On his social media site, the president-elect went further:
“He believes in the promise of robust, innovative capital markets that are responsive to the needs of Investors, & that provide capital to make our Economy the best in the World. He also recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before.”
On November 4, the date of the US presidential election, one bitcoin was worth US67,077.
Four weeks later, on December 5, one bitcoin is worth $US102,510 (nearly $160,000 in Australian currency).
Bitcoin breaks through the $US100,000 mark for the first time.
‘Carnival atmosphere’ for crypto
“This is a momentum rally,” Jason Titman, chief executive of crypto brokerage Swyftx, told Bloomberg.
“Global spot volumes are above mid-pandemic levels and the nomination of Paul Atkins as SEC chair just added to the carnival atmosphere.”
Capital.com senior financial market analyst Kyle Rodda said Bitcoin often rallied into the end of the year, but the Trump presidency starting in late January may extend the rally this time around.
“The stars are aligning for the digital asset,” he said.
“These end-of-year melt-ups often see Bitcoin more than double in value — 2016, 2017 and 2020 saw 60 per cent, 180 per cent, and 160 per cent rallies occur between mid-November and the end of the year.
“Given the reduced regulatory risk, the continued appeal of non-fiat assets because of the perception of US fiscal profligacy, and greater geopolitical risks, there are continued tailwinds that could support prices going higher.”
US congressman Patrick McHenry, a North Carolina Republican and chairman of the House Financial Services Committee, said Mr Atkins would ensure US markets remained world leaders.
“Paul Atkins has the expertise and experience needed to restore faith in the SEC,” he wrote on X.
“I’m confident his leadership will lead to clarity for the digital asset ecosystem and ensure US capital markets remain the envy of the world.”
But Europe goes the other way
In the European Union, the regulation of cryptocurrencies is heading in the opposite direction.
In July this year, Fabio Panetta, the governor of Italy’s central bank, told the Italian Banking Association that Europe’s financial system was facing risks stemming from crypto-assets that required attention.
He said unbacked crypto-assets such as Bitcoin or Ethereum had “no intrinsic value,”
He said the European Union had recently adopted the Markets in Crypto Assets Regulation (MiCA), a specific set of rules to help authorities monitor the risks associated with crypto-assets, that will be implemented over the rest of this year.
“Crypto-assets are held by operators whose main objective is to sell them on at a higher prices and, in some cases, to dodge tax rules or the regulations in place to counter money laundering and terrorist financing,” he said.
“In many cases, these crypto-assets are in effect akin to a gamble, a speculative high-risk contract, whose value is not tied to fundamentals.
“For these reasons, their value fluctuates very sharply.
“Clearly, they do not possess the characteristics that make them suited to perform the three inherent functions of money: a means of payment, store of value and unit of account,” Mr Panetta said.
