Cairo: Hani Kamal El-Din
Bitcoin’s price has skyrocketed in recent weeks, climbing closer to six figures. The leading cryptocurrency, along with others, is riding a wave of momentum attributed largely to Donald Trump’s victory in the U.S. presidential election. The former president has outlined ambitious plans for cryptocurrencies, including transforming the United States into a global leader in the digital currency space. While these developments are fueling optimism, experts caution that significant challenges remain for Bitcoin’s wider adoption as a global currency.
Over the past 20 days, Bitcoin has surged by 50%, rising from around $66,000 to trading just shy of $100,000 as of November 22. Analysts attribute this remarkable rally to favorable political and market dynamics, bolstered by Trump’s pro-crypto stance and strategic promises. During his campaign, Trump pledged to make the U.S. a “Bitcoin superpower” and the “cryptocurrency capital of the world.” He has also initiated efforts to establish a family-run crypto business, aligning his administration with several digital asset advocates, including Elon Musk.
Key Political and Market Drivers
Among the key promises that Trump made during his campaign was the dismissal of U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler, a staunch critic of cryptocurrencies. This move is anticipated to ease regulatory pressures on the crypto sector, which has often been constrained by Gensler’s oversight. Moreover, Trump’s proposal to create a strategic Bitcoin reserve, mirroring the gold reserves held by governments, has further fueled market enthusiasm.
The investment landscape has also played a pivotal role in Bitcoin’s rally. Major institutional investors such as BlackRock and Vanguard have been purchasing large amounts of Bitcoin throughout the year, injecting billions of dollars into the market. This influx of capital has heightened demand and driven prices upward, though experts caution that a market correction could occur if investors decide to take profits. Meanwhile, Ethereum and other cryptocurrencies have also seen gains, albeit more modest compared to Bitcoin’s meteoric rise.
Global Confidence in Bitcoin Amid Fiat Currency Declines
The growing mistrust of fiat currencies, driven by escalating government debt and geopolitical uncertainties, has also contributed to Bitcoin’s appeal. In a world where the U.S. dollar and the euro are increasingly weaponized in economic conflicts, Bitcoin has emerged as a “safe haven” asset akin to gold. This shift in perception has further solidified the cryptocurrency’s position as a hedge against economic instability.
However, fundamental challenges persist. Bitcoin’s limited transaction processing capacity—around 6 to 8 transactions per second—remains a significant obstacle to its scalability as a global currency. By comparison, traditional payment systems like Visa and Mastercard can handle tens of thousands of transactions per second. Experts warn that increased transaction volumes could strain Bitcoin’s infrastructure, compromising its efficiency and appeal as a payment method.
Bitcoin’s Institutionalization and Risks Ahead
While Bitcoin’s popularity continues to grow, analysts remain cautious about its institutionalization. Financial experts highlight the speculative nature of the recent price surge, driven more by positive sentiment and market hype than by substantive adoption. According to plans under discussion, the U.S. Treasury might acquire up to 1 million Bitcoins over five years as part of its strategic reserve initiative. However, critics argue that such proposals could remain theoretical, risking market disappointment.
Cryptocurrency analyst Alexey Krichevsky predicts that Bitcoin will likely surpass the $100,000 mark soon and potentially double its value annually during Trump’s presidency. However, he also notes that the market remains volatile and subject to unforeseen disruptions. For now, Bitcoin’s trajectory hinges on maintaining its momentum, further institutional interest, and regulatory clarity.
