Bitcoin (BTC) Price Surges to New All-Time High of $108K as US Mulls Establishing a National Strategic BTC Reserve

Bitcoin has broken another price record-high for the second straight day amid optimism about the possibility of the United States under Donald Trump establishing a national strategic BTC reserve.

Bitcoin price hit a fresh record high for the second consecutive day on optimism that the incoming U.S. administration will establish a national strategic BTC reserve.

At one point Tuesday night, BTC was trading above $108,100, a day after it breached the $107,000 mark. The no. 1 cryptocurrency has now notched a 10% gain for the week as the crypto community continues to cheer positive developments within the industry.

What’s Driving Bitcoin’s Surprising Surge?

While Bitcoin's rally could be attributed to several factors in the broader financial markets and multiple positive headlines in the crypto industry, including the hype around Ripple's RLUSD stablecoin, the main driver behind the digital currency's recent surge is the rising hopes for a U.S. strategic Bitcoin reserve.

Over the weekend, the incoming U.S. president reiterated plans to set up a BTC strategic reserve, sparking much excitement among Bitcoiners and crypto bulls.

Sen. Cynthia Lummis (R-WY), a Trump ally, has also said several times in recent months that she will push for a BTC reserve through a bill that includes a provision stating the U.S. government will buy Bitcoins.

El Salvador has been implementing a similar strategy since late 2022. Salvadoran President Nayib Bukele, a self-proclaimed Bitcoin maximalist, has been pushing for mass adoption of the cryptocurrency among his countrymen, but the results have fallen short of expectations.

Optimism Over US $BTC Reserve Sparks Debate, Raises Concerns

Several crypto users have argued that a U.S. Bitcoin reserve will ultimately be beneficial for the BTC community and the broader crypto market, but there have been debates about how the reserve will impact crypto and whether the effects will be positive or negative.

For Matthew Sigel, head of digital assets research at global investment manager VanEck, the U.S. government can do as it pleases with Bitcoin because it is "up for grabs by anyone."

However, he admitted that he would have "a different preference for how the U.S. acquires its Bitcoin than in the open market."

Sigel's comments came in response to statements by Base Layer LLC Founder @0xemon that Bitcoin "should remain free" from any government involvement and instead "remain the people's money."

He argued that setting up a national BTC fund is not a good political move and could end up affecting the "relevance" of the world's first decentralized cryptocurrency in a negative way, like the end of "the gold standard."

Nic Carter, a founding partner at Castle Island Ventures, told Bloomberg Tuesday that if the government will "HODL" its existing stockpile of seized Bitcoins, then that could work as a national fund.

However, he does not believe that Congress will support Lummis's bill that will have the government buying BTC because it would "signal a move away from the dollar system."

"We shouldn't do something that would call into question our own solvency," he added. He said it would certainly help Bitcoiners if a strategic reserve on BTC is created, but he thinks it won't benefit anyone "if we were to shake confidence in global markets by implying the dollar is at risk."

El Salvador's $BTC Gamble

For El Salvador, its bet on Bitcoin has paid off so far. On Monday, as the BTC price breached the $107,000 level, Bukele disclosed the country's Bitcoin treasury.

Bukele first announced the nation's Bitcoin strategy in late 2022, during the crypto winter. Since then, El Salvador has been buying 1 BTC almost every day, and on-chain data shows that the country has not missed a single purchase.

It remains to be seen whether the U.S. will follow in El Salvador's footsteps if it does decide to create a national BTC reserve, but it is safe to say that crypto's voice is being heard, given Trump's actions since being elected.