Bitcoin hit a new milestone on Tuesday, topping $108,000 for the first time, continuing its impressive rise amid growing speculation about President-elect Donald Trump’s potential plans for a U.S. strategic Bitcoin reserve once he takes office. The cryptocurrency also took a major step forward as an investment late last week, with MicroStrategy (MSTR) being added to the Nasdaq 100, making it part of the widely held QQQ ETF.
MSTR stock soared early on Monday, only to give back those gains later in the day. But other crypto-related stocks, including Coinbase (COIN), Robinhood (HOOD), and Bitcoin miners, joined the cryptocurrency’s upward climb.
During his campaign, Trump mentioned the idea of a $20 billion Bitcoin reserve. In a CNBC interview on Thursday, he seemed to suggest it’s still very much on the table. When asked by Jim Cramer whether a crypto version of the Strategic Petroleum Reserve was in the works, Trump responded, “Yeah, I think so,” adding, “We’re going to do something great with crypto.”
Rep. Cynthia Lummis (R-Wyo.) has put forward a proposal for the U.S. government to buy 1 million Bitcoin over five years, which would cost more than $100 billion at current prices. However, this plan requires Congressional approval.
If Congress doesn’t get on board, some in the crypto space believe Trump could take matters into his own hands. Jack Mallers, CEO of Strike, suggested on Tim Pool’s podcast that Trump could issue an executive order on his first day in office to establish a Bitcoin reserve. Mallers pointed out that the president has the authority to take action to protect the dollar through what’s been called the “Dollar Stabilization Act.”
Dennis Porter, CEO of the Satoshi Action Fund, confirmed that Trump is exploring the possibility of an executive order to create a “Strategic Bitcoin Reserve.” Porter also hinted that Trump might use the Exchange Stabilization Fund to purchase Bitcoin, which could make a huge impact.
What is the Exchange Stabilization Fund?
The Exchange Stabilization Fund, created in 1934 through the Gold Reserve Act and updated in the 1970s, was originally used for gold transactions. It now allows the Treasury Department to engage in foreign exchange and credit transactions to stabilize the U.S. dollar, with the approval of the president.
Bitcoin has been on an extraordinary run, surpassing its previous all-time high of $103,900 on December 5 and reaching a peak of $108,262 on Tuesday morning. It’s up roughly 156% this year, bringing its total value to $2.1 trillion, according to CoinDesk. That’s more than four times the value of Ethereum, which has also seen gains, though it still falls short of its 2021 highs.
MicroStrategy, a company that has heavily invested in Bitcoin, is set to join the Nasdaq 100 on December 23. As part of this index, MicroStrategy will automatically be included in popular ETFs like the Invesco QQQ Trust. This could result in more buying activity for MSTR stock, which saw an initial 7% rise on Monday before finishing the day slightly lower. Other crypto-related stocks, like Coinbase, Robinhood, and Marathon Digital Holdings (MARA), also saw gains.
MicroStrategy’s huge Bitcoin bet has paid off so far. The company now holds 439,000 Bitcoin, purchased for $27.1 billion, or $61,725 per coin. This has generated a paper profit of about $19 billion, even though the company’s software business is still operating at a loss. Despite that, MicroStrategy’s market capitalization has reached $83 billion.