Investing.com– Bitcoin rose on Tuesday, extending recent gains and briefly hitting all-time highs on sustained optimism about the potential for a Strategic Reserve under incoming U.S. President Donald Trump.
Crypto markets were also encouraged by MicroStrategy's addition to the , although overall gains faded in anticipation of a Federal Reserve meeting this week.
rose 1.9% to $106,623.5 at 00:25 CET (05:25 GMT). The world's largest cryptocurrency hit a record high of $107,767.6 on Tuesday.
Bitcoin Boosted by Trump's Strategic Reserve Talks, But Questions Remain
Bitcoin's latest rally largely came after Trump raised the prospect of a Bitcoin Strategic Reserve, similar to the government's oil reserve, during an interview with CNBC last week.
Trump had promised pro-cryptocurrency regulations if elected, and his recent nominations for key Cabinet and regulatory positions harbored pro-cryptocurrency stances. But analysts have been skeptical about the prospect of a Bitcoin reserve, especially how it could be formed.
If Trump were to form the reserve by executive order, he would have limited funds available from the Treasury to fund further Bitcoin purchases. A future administration could also rescind his order, dissolving the reservation.
The formation of a Bitcoin reserve similar to the Strategic Petroleum Reserve will require approval from Congress, Compass Point said in a recent research note.
While Republicans have a majority in Congress, a high federal deficit will mean the government will have to distribute more deficit funds to purchase additional currencies, a scenario that bipartisan lawmakers will likely oppose, given that cutting the fiscal deficit has become a controversial topic.
Compass Point also sees little chance of passing the Bitcoin Act, recently proposed legislation that mandates quarterly government purchases of the cryptocurrency.
The Department of Justice owns around 200,000 Bitcoins, most of which were confiscated from criminals. This arsenal could also become a reserve, although it is not yet clear how this will be implemented.
Crypto Price Today: Altcoins Cool Down with Fed in Focus
Cryptocurrency prices overall were less bullish than Bitcoin, as risk appetite cooled in anticipation of a Federal Reserve meeting this week. But most altcoins posted strong gains in recent sessions, following Bitcoin's rally.
The world's No. 2 cryptocurrency rose 1.1% to $4,011.80, returning within sight of an all-time high in 2021. The world's No. 3 cryptocurrency rose 3.7% to $2.4999.
and fell more than 3% each, while among meme tokens, they fell 1.4%.
The Federal Reserve is widely expected to cut interest rates on Wednesday. But the focus will be squarely on the central bank's outlook on rates, especially in the face of sticky inflation.
The central bank could potentially signal a slower pace of easing in 2025, signaling rates will stay high for longer. Such a scenario could portend some headwinds for cryptocurrency prices.
