Bitcoin surged to a historic high above $106,000 on Sunday evening, reflecting heightened investor optimism ahead of the Federal Reserve's anticipated interest rate decision this week. The digital currency later pulled back slightly, trading at $103,804.71 on Monday, according to Coin Metrics.
The flagship cryptocurrency's rally underscores its rising prominence in financial markets. Ether, the second-largest cryptocurrency by market cap, traded just below $4,000, while the broader crypto market, as tracked by the CoinDesk 20 Index, remained relatively stable.
Investors are closely watching the Federal Reserve, which is widely expected to lower interest rates by 25 basis points during its two-day policy meeting concluding Wednesday. According to the CME FedWatch tool, there is a 96% probability of such a move. Analysts note that lower interest rates often benefit Bitcoin by weakening the dollar and increasing liquidity, factors that historically correlate with Bitcoin price surges.
Adding to the cryptocurrency's momentum are remarks from President-elect Donald Trump, who reiterated his administration's commitment to making the U.S. a leader in Bitcoin and blockchain technology. Speaking to CNBC on Sunday, Trump confirmed plans to establish a Bitcoin federal reserve, likening it to the nation's strategic oil reserve.
"We're going to do something great with crypto because we don't want China, or anybody else, to get ahead," Trump said. His remarks further fueled speculation about a friendlier regulatory environment for digital assets under his administration, which could solidify Bitcoin's position as a cornerstone of the global financial system.
Bitcoin's remarkable ascent has been bolstered by several factors, including growing institutional adoption and investor enthusiasm. Since the November election, the cryptocurrency has gained over 50% and is up 145% year-to-date. Its market capitalization now exceeds $2 trillion, while the broader cryptocurrency market is approaching $4 trillion.
The rally coincides with broader shifts in global monetary policy and sentiment. Russian President Vladimir Putin recently criticized the use of the U.S. dollar for political leverage, suggesting that countries are increasingly exploring alternative assets, including cryptocurrencies. "For example, Bitcoin-who can prohibit it? No one," Putin remarked earlier this month.
Despite Bitcoin's meteoric rise, skeptics remain cautious. Federal Reserve Chair Jerome Powell recently compared Bitcoin to gold, emphasizing its volatility and limited use as a medium of exchange or store of value. "People are not using it as a form of payment," Powell said.
Still, financial analysts are optimistic about Bitcoin's trajectory. Nigel Green, CEO of financial services firm deVere Group, noted the dual forces driving Bitcoin's resurgence: institutional investment and investor fear of missing out (FOMO). "The stage is set for even greater highs in the months ahead," Green said, adding that Bitcoin's price could reach $150,000 by mid-2025.
This growing enthusiasm for cryptocurrencies is reflected in the performance of related stocks. Shares of MicroStrategy, a company heavily invested in Bitcoin, jumped 4% following news that it would join the Nasdaq 100 stock index later this month. Meanwhile, Coinbase shares remained relatively flat in pre-market trading.
