Bitcoin breaks $100K: Inflation, Trump policies and market optimism fuel record rally

Bitcoin surged past the $100,000 milestone, riding a wave of optimism fueled by U.S. inflation data that strengthened bets on another Federal Reserve interest rate cut.

The cryptocurrency jumped nearly 5% on Wednesday in the U.S., marking its most significant rally in two weeks. By Thursday morning in Singapore, Bitcoin traded at $100,665 after trimming some gains. Meanwhile, smaller cryptocurrencies saw muted movement within relatively narrow ranges.

Trump’s regulatory shift sparks record highs

President-elect Donald Trump’s plans to reverse the Biden administration’s crackdown on cryptocurrencies, advocating instead for more lenient regulations, propelled Bitcoin to a record-breaking $103,800 on December 5. However, the flagship cryptocurrency faced challenges staying above six figures as speculators locked in profits.

Market optimism also drew strength from last month’s U.S. Consumer Price Index data, which aligned with expectations. This boosted the likelihood of lower borrowing costs when the Federal Reserve meets next week. The prospect of easing monetary policy invigorated investor sentiment, driving the tech-heavy Nasdaq 100 index to an all-time high.

Billionaire advice: hold some Bitcoin

Thomas Peterffy, the billionaire founder of Interactive Brokers, urged investors to diversify their portfolios with Bitcoin, albeit in modest proportions.

In addition to favorable regulations, Trump proposed a bold idea: establishing a national strategic Bitcoin reserve. While the concept faces skepticism, Eric Trump, the president-elect's son, told Bloomberg TV, “My father will be a strong ally of the industry.”

Once a vocal critic of cryptocurrencies, Trump has pivoted dramatically, influenced by the industry’s significant contributions during the U.S. election campaign. The Republican president now has personal ventures in the crypto sector — a space infamous for its volatility, fraud, and ties to criminal activity.

Since Trump’s election victory on November 5, Bitcoin has soared nearly 50%, underpinned by a net inflow of approximately $11 billion into U.S.-listed spot Bitcoin ETFs. Ethereum, the second-largest cryptocurrency, has also benefited, attracting $2.4 billion into equivalent products during the same period.

This convergence of policy shifts, regulatory clarity, and institutional adoption has solidified Bitcoin’s position in the financial landscape, potentially marking the dawn of a new era for digital assets.