Bitcoin Hits 106,000 As Markets Anticipate Fed To Cut Interest Rates And Trump To Establish Bitcoin Strategic Reserve

Bitcoin BTC rallied to a new all-time high above 106,000 on December 15 as speculation of it becoming a United States treasury asset continues to gain traction while the financial markets expect the Federal Reserve to cut interest rates this week.

According to TradingView data, the price of the flagship cryptocurrency topped out at 106,554, before settling in the 105,000 range. Bitcoin's rally came after the tech-heavy Nasdaq Composite closed on Friday's trading session with a 0.3 weekly gain, outperforming other major stock indexes in the U.S. The flagship crypto asset's previous ATH was 104,000, recorded on December 5.

Speaking to crypto media outlet Cointelegraph, CK Zheng, chief investment officer at ZK Square, said that Bitcoin has likely entered "Santa Claus mode" as investors look towards allocating more capital to the asset class and the broader crypto market.

He predicts the price to surge to 125,000 early next year but warns of a 30 correction as the Trump administration takes office and its bullish policy decisions are priced in. Such a correction would see BTC retrace to around 87,500.

Investors are also looking forward to the Fed lowering interest rates this week during its two-day Federal Open Market Committee FOMC meeting on December 18. Financial analysts forecast a 96 chance of a 0.25 or 25 basis point interest rate cut. This would be a positive outcome for the price of Bitcoin, which often trades similarly to tech stocks and benefits from a lower interest rate environment.

Bitcoin has also demonstrated long-term correlations with decisions to lower borrowing costs, which implies a weakening dollar and growing money supply. The apex crypto asset's price is now up nearly 8 for the month, 50 since the U.S. presidential election, and 192 in 2024.

Major catalysts for the crypto's meteoric rise are President-elect Donald Trump's promises of a friendlier regulatory environment for the sector and the establishment of a national strategic Bitcoin reserve.

Jack Mallers, founder and CEO of crypto payments firm Strike, recently stated that the incoming President could potentially sign an executive order designating Bitcoin as a reserve asset on his first day in office on January 20, 2025, allowing the government to accumulate the crypto asset.

Meanwhile, Dennis Porter, CEO of the non-profit Bitcoin advocacy group Satoshi Action Fund, said that a third state is potentially following Texas and Pennsylvania in establishing a strategic Bitcoin reserve on a state level. During a December 15 X Spaces, he said that lawmakers of the unnamed state sent him a draft of the bill.

Last week, Rep. Giovanni Capriglione introduced a bill named the "Texas Strategic Bitcoin Reserve Act" in the Texas House of Representatives, which proposed the state comptroller hold BTC as a reserve asset for at least five years. As per the legislation, Texas residents and governmental entities could "voluntarily" donate their coins to the reserve. However, the bill does not mention any BTC seized by authorities.

Crypto advocacy group Texas Blockchain Council, which helped draft the bill, said that no taxpayer fund will be spent on buying the Bitcoin, instead it will come as donations from residents, companies, and "other existing state resources".

Pennsylvania was the first U.S. state to introduce a bill for a Bitcoin strategic reserve, which is modeled around proposals from the Satoshi Action Fund. The group's founder Dennis Porter said the same framework was used to draft the Texan bill and that he expects at least 10 states to introduce the legislation in total.

Prominent financial analyst Tony Sycamore predicted that the market is now awaiting a 110,000 valuation and the pullback that many were expecting "just didn't happen". Investor sentiment also received a boost from the news that MicroStrategy MSTR was included in the tech-heavy Nasdaq 100 index. This will most likely lead to more inflows into the software company turned largest corporate holder of Bitcoin.

Last week, while speaking to CNBC, Trump said that the United States was going to do 'something great" with crypto and didn't want any other country to become an industry leader. When asked if he plans to build a Bitcoin reserve similar to the oil reserve, the President-elect said "Yeah, I think so".