Bitcoin Vaults to Record High as Investors Eye $100,000 Milestone

The value of the world's most popular cryptocurrency has soared 31% since the reelection of former President Donald Trump

Bitcoin soared to a record high on Thursday, surging more than 3% in early trading and hurtling toward investors’ long-sought milestone of $100,000.

The price of bitcoin briefly exceeded $98,000 for the first time on Thursday morning, before retreating to about $97,600.

The value of the world’s most popular cryptocurrency has soared 31% since the reelection of former President Donald Trump, who is widely viewed as friendly toward digital currency.

By comparison, the S&P 500 has climbed 2.4% since Election Day, while the tech-heavy Nasdaq has increased 2.6%.

The run-up of bitcoin extended to other parts of the crypto industry. Ether, the second-largest cryptocurrency, jumped 8% in early trading on Thursday. Lesser-known litecoin rose nearly 6%, and dogecoin ticked up more than 2%.

On the campaign trail, Trump vowed to bolster the cryptocurrency sector and ease regulations enforced by the Biden administration. Trump also promised to establish the federal government's first National Strategic Bitcoin Reserve.

Trump said he would replace Securities and Exchange Commission Chair Gary Gensler, whom many crypto proponents dislike for what they perceive as a robust approach to crypto regulation.

In July, Trump told the audience at a cryptocurrency conference in Nashville, Tenn., that he wanted to turn the U.S. into the “crypto capital of the planet.”

“I’m calling it the ‘election dividend,'” James Butterfill, head of research at digital asset management firm CoinShares, told ABC News. “We went from being worried about a Democrat getting elected to what we’ve got: a Republican clean sweep.”

The recent rise follows a period of stellar returns that stretches back to last year. The price of bitcoin has soared more than 150% since November 2023. Over that period, the S&P 500 has climbed about 30%.

Those gains have been propelled, in part, by U.S. approval in January of bitcoin ETFs, or exchange-traded funds. Bitcoin ETFs allow investors to buy into an asset that tracks the price movement of bitcoin, while avoiding the inconvenience and risk of purchasing the crypto coin itself.

Options trading for bitcoin ETFs

On Tuesday, options on BlackRock's popular iShares Bitcoin Trust ETF (IBIT) were made available for trading on the Nasdaq. The options, which provide a new avenue for bitcoin investors, allow individuals to commit to buy or sell the ETF at a given price by a specific date. While such investments typically come with additional risk, they can also make large payouts.

The price of IBIT jumped 3.1% on Thursday.

The newly available options may account for some of the rise in the price of bitcoin over recent days, Bryan Armour, the director of passive strategies research at financial firm Morningstar, told ABC News.

“The options add volatility on top of volatility, which has interested some of the crypto investors,” Armour said.

The crypto industry entered this year bruised after a series of high-profile collapses and company scandals.

FTX, a multibillion-dollar cryptocurrency exchange co-founded by Sam Bankman-Fried, collapsed in November 2022. The implosion set off a 17-month legal saga that resulted in the conviction of Bankman-Fried for fraud. In April, Bankman-Fried was sentenced to 25 years in prison.

The surge of bitcoin since Election Day may continue for the foreseeable future, since past periods of momentum have been shown to propel the cryptocurrency, Armour said. But crypto investments remain highly volatile, he added, recommending that the asset make up no more than 5% of a person’s portfolio.

“It’s notoriously difficult to provide a value for bitcoin’s price,” Armour said. “It can go up; it can go down.”

“I would continue to keep any allocation small,” Armour added.

Copyright © 2024, ABC Audio. All rights reserved.