Bitcoin Surges Amid Trump Reserve Speculation

Bitcoin Hits Record Levels
Investing.com– Bitcoin rose on Tuesday, extending recent gains and briefly hitting record highs amid sustained optimism over a potential Strategic Reserve under incoming U.S. President Donald Trump.

Crypto markets were also optimistic after MicroStrategy was added to the Nasdaq 100 index, although gains waned in anticipation of a Federal Reserve meeting this week.

Bitcoin climbed 1.9% to $106,623.5 by 00:25 ET (05:25 GMT), reaching a record high of $107,767.6 earlier in the day.

Bitcoin Boosted by Trump’s Strategic Reserve Talk

Bitcoin’s latest rally is partly due to Trump discussing the idea of a Strategic Bitcoin Reserve, similar to the government’s petroleum reserve, during a CNBC interview last week.

Trump had promised crypto-friendly regulations if elected, and his recent cabinet nominations reflect pro-crypto views. However, analysts are skeptical about the formation of a Bitcoin reserve, questioning how it could be established.

If Trump pursued the reserve through an executive order, options for funding from the Treasury would be limited for Bitcoin purchases. Moreover, a future administration could undo his order, nullifying the reserve.

Creating a Bitcoin reserve akin to the Strategic Petroleum Reserve would need Congressional approval, as noted in a recent Compass Point research report. Although Republicans control Congress, rising Federal deficits may complicate purchasing additional coins, which bipartisan lawmakers may oppose given the ongoing debate over fiscal deficits.

Compass Point also sees little chance that the Bitcoin Act—a proposal for quarterly government crypto purchases—will pass.

The Department of Justice holds approximately 200,000 Bitcoins, mostly confiscated from criminals, which could be converted into a reserve, though the implementation remains unclear.

Crypto Prices Today: Fed Meeting in Focus

Overall, crypto prices were more subdued compared to Bitcoin, as risk appetite diminished in anticipation of the Fed meeting this week. Despite this, most altcoins had recently experienced strong gains, following Bitcoin's rally.

The second-largest cryptocurrency, Ether, rose 1.1% to $4,011.80, approaching its previous record high from 2021. XRP, the third largest, increased by 3.7% to $2.4999.

However, Solana, Cardano, and Polygon each fell by over 3%, while meme token Dogecoin dropped 1.4%.

The Fed is expected to reduce interest rates by 25 basis points on Wednesday, but market focus will be on the central bank’s long-term rate outlook amidst persistently high inflation. A potential signal for a slower pace of easing in 2025 could pose challenges for crypto prices.