(Bloomberg) — Bitcoin spiked above $93,000 for a short period as expectations of further interest rate cuts from the Federal Reserve added to the momentum of the president-elect’s pro-cryptocurrency stance. Donald Trump.
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The digital asset rose almost 6% in the US on Wednesday to a record high of $93,462, but failed to maintain the rise, changing hands at $90,205 at 6:13 a.m. Thursday in London. The overall crypto market swung between gains and losses.
Speculators are trying to analyze whether Trump’s rhetorical support for digital assets will continue to boost Bitcoin, opening a path towards $100,000, or give way to profit-taking after a 34% advance since the US election on 5 November.
“After such a prolonged move, it is reasonable to think we will see a shift in sentiment, resulting in an increase in two-way flows,” Chris Weston, head of research at Pepperstone Group, wrote in a note. “Still, the trend in Bitcoin is bullish, for now, and I would expect buyers to rally once the liquidation of a concentrated position has run its course and we move to a cleaner position.”
U.S. inflation data on Wednesday was in line with analysts’ projections, prompting traders to increase bets on another quarter-point rate cut by the Federal Reserve in December. At the same time, Trump’s broader platform of tax cuts and protectionist trade tariffs complicates the picture by threatening to stoke price pressures in the future.
The president-elect has pledged to create a cryptocurrency-friendly regulatory framework, establish a strategic Bitcoin reserve, and make the United States the global center of the industry. Trump, once a crypto skeptic, changed course after digital asset companies spent heavily during the election campaign to promote their interests.
Questions remain about the viability of these promises and the possible implementation schedule. Trump and his Republican Party have unified control of the elected branches of government, but matters of state such as economic and fiscal policy may be first in line for action.
Billionaire Michael Novogratz, founder of cryptocurrency-focused Galaxy Digital LP, said on Bloomberg Television that the odds of a strategic U.S. Bitcoin reserve are low, while adding that the largest token could soar to $500,000. if it materializes.
The cryptocurrency rally is spreading across the financial sector, driving peak trading volumes and inflows into US Bitcoin exchange-traded funds. MicroStrategy Inc., a software company that has adopted Bitcoin on its balance sheet, is driving a Bloomberg gauge for U.S. convertible debt toward its best month this year.