The world’s largest cryptocurrency, Bitcoin, has increased by over 100% since the start of 2024, but most of these gains have come in the last few months. If you take a closer look, you’ll see that Bitcoin has increased by over 20% in just one week after Donald Trump won the US presidency! It used to hover around $60,000, but is now hovering around $90,000, with many predicting that $100,000 is just around the corner.

This certainly begs the question: What’s behind this sudden surge?

Let’s start from the beginning.

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, have a highly volatile value, and come out of thin air. Unregulated Crypto Assets can facilitate illegal behavior, including drug dealing and other illegal activities.”

Yes, that was Donald Trump’s promise in 2019.

And today? He promised to make the US “the crypto capital of the planet.” Quite a change, right?

Unlike its predecessors, the Trump administration is supportive of cryptocurrencies and is pushing Bitcoin’s sails into the wind. This increase is likely playing a role in Bitcoin’s rise beyond the positive crypto vibes. If you take a closer look, you’ll see other reasons.

First, there’s Bitcoin mining. Look, crypto mining is known to be energy-intensive, but Trump wants it to be mined, minted, and manufactured in the US. Think about it. If the US becomes the largest miner, it could increase its role in the crypto world and strengthen Bitcoin’s infrastructure. It also fits right into Trump’s energy strategy.

How? He plans to deregulate the energy sector, making energy more accessible and affordable.

Now, it’s important to understand that the US is already a net exporter of oil, and further deregulation could make energy even cheaper. Since energy accounts for 60-70% of Bitcoin mining costs, cheaper energy means more profitable mining. This is why cryptocurrency holders are excited; lower energy costs could increase miners’ margins and strengthen the Bitcoin network. It’s a win-win situation.

The second reason is Trump’s friendlier approach to digital assets.

You know, working with crypto advocates like Elon Musk, who supports Dogecoin. This is a big change from previous administrations and boosts market confidence. Trump also plans to replace SEC Chairman Gary Gensler, who has been pushing for stricter crypto rules in the Biden administration. This change could mean less regulation, which Bitcoin fans are celebrating.

But perhaps Trump’s most eye-catching promise is his idea for a U.S. Bitcoin Strategic Reserve.

What is this, you ask?

Think of it as a national oil or currency reserve — but filled with Bitcoin instead of those assets.

The idea was created by U.S. Senator Cynthia Lummis, who calls it the Strategic Bitcoin Reserve Bill. It proposes to establish a network of decentralized storage facilities across the U.S. to securely hold Bitcoin reserves. It then requires the U.S. Treasury Department to purchase 200,000 Bitcoins per year for five years. That’s a total of 1 million BTC! The government will hold these reserves for at least 20 years and implement a proof-of-reserve system to verify their holdings. In case you’re wondering, this system allows the government to show that it holds Bitcoin securely without revealing details that could compromise Bitcoin’s security. Public audits will then verify that the government actually owns the Bitcoin it claims to.

This is a BIG deal!

Because at Bitcoin’s current price of around $90,000, this would cost the US over $90 billion. Sure, you could argue that the purchase period would last five years and that Bitcoin’s price could fluctuate. But the idea of ​​a government entity buying 5% of Bitcoin’s total supply would push prices up, right? This is the US, so investors are taking notice.

And this isn’t just about Bitcoin. As Lummis puts it, “Our goal was to create a modern-day parallel to our gold stockpile, to act as a digital-age hedge against economic uncertainty while continuing the Treasury’s historical role in preserving critical national reserves.”

So yes, the US would view these reserves as a “digital-age hedge against economic uncertainty,” much like gold stockpiles.

Remember, this is something no other country has tried, and if it happens, it could solidify the US’s position as a global leader in crypto assets, perhaps even attracting interest from other countries.

Even without the Trump factor, macroeconomic trends are also giving Bitcoin momentum. The US national debt is at record levels and is expected to grow further. Historically, when government debt spirals out of control, investors look for protection or hedges against weakening currencies. Bitcoin, with a fixed supply of 21 million coins, is seen as a hedge because it cannot be inflated like traditional money.

So all of this seems like a perfect storm for Bitcoin.

So does this mean Bitcoin will rise?

Well, yes, but there are still problems. Because Bitcoin has a history of volatility and can fluctuate wildly in a short period of time. There is no easy way to evaluate it as an asset.

Sure, the fundamentals and buying interest look strong right now, but market corrections are a natural part of any asset’s journey, especially for something as speculative as Bitcoin. For example, after the 2017 bull run, Bitcoin lost almost 80% of its value by the end of 2018 before recovering. Similar declines have followed each previous rise.

Geopolitical events, regulatory pressures, or even technological issues could affect Bitcoin prices, such as the 2021 Chinese crypto mining ban that triggered a major decline. While Trump’s policies are currently positive, there is always the risk of unforeseen reversals or regulatory pressures, especially for those concerned about the impact of cryptocurrencies on financial stability.

Bitcoin’s upcoming halving event is another potential driver of volatility. So here’s the thing. Bitcoin miners verify transactions and are rewarded with new coins. But every four years, this reward is halved. For example, when Bitcoin started in 2009, miners earned 50 Bitcoin per block. By 2020, it had fallen to 6.25 Bitcoin. This year, it halved again to 3.125 BTC.

Historically, halving events have led to rapid price increases followed by corrections. Perhaps it is these wild swings that make Bitcoin exciting but also frustrating for investors.

NOTE: The last Bitcoin is expected to be mined around 2140, but as the rewards continue to halve, they will eventually become so small that some of the 21 million Bitcoins may never be fully mined.

Anyway, another interesting point that you can’t ignore here is how the stock prices of the companies that provide the power for Bitcoin mining are also rising. This simply means that wherever Bitcoin intersects with Trump’s policies, investors are expecting big gains. For those who aren’t interested in Bitcoin or its price fluctuations, such companies can be a solid investment.

Yes, that’s exactly why Bitcoin prices are rising, and why it’s one of the hottest topics in the financial world again.

Let’s see what time will tell us.