Bitcoin soared past $108,000 for the first time on Tuesday, marking a historic milestone as speculation grows around President-elect Donald Trump’s potential plans to establish a U.S. Strategic Bitcoin Reserve. The cryptocurrency’s momentum also gained further validation last week as MicroStrategy (MSTR) secured inclusion in the Nasdaq 100 index and its associated QQQ ETF.
Trump’s Bitcoin Reserve Plans
During the campaign, Trump floated the idea of creating a $20 billion Bitcoin reserve, and in a recent CNBC interview, he suggested that the concept is still under consideration. When asked by host Jim Cramer about the possibility of a Bitcoin version of the Strategic Petroleum Reserve, Trump responded, “Yeah, I think so. We’re going to do something great with crypto.”
Legislative and Executive Pathways
Rep. Cynthia Lummis (R-Wyo.) has previously proposed a government purchase of 1 million Bitcoin over five years—a move that would cost over $100 billion at current prices. However, this plan would require Congressional approval.
In contrast, some industry insiders believe Trump could bypass Congress. Strike CEO Jack Mallers recently claimed on the Tim Pool Podcast that Trump plans to sign an executive order on his first day in office to create the Bitcoin reserve. Mallers noted that Trump may invoke the Dollar Stabilization Act, which grants the President broad authority to protect the U.S. dollar.
Echoing this, Satoshi Action Fund CEO Dennis Porter, a key crypto advocate, stated Trump is actively exploring an executive order to establish a “Strategic Bitcoin Reserve”. Porter added that Trump may tap into the Exchange Stabilization Fund (ESF) for purchasing Bitcoin.
What Is the Exchange Stabilization Fund?
The Exchange Stabilization Fund (ESF), established by the Gold Reserve Act of 1934 and amended in the 1970s, allows the Treasury Department, with Presidential approval, to intervene in financial markets. Originally created to manage gold transactions, the ESF can deal in gold, foreign currencies, and other financial instruments. Industry experts suggest the ESF could provide the legal framework for Trump to buy and hold Bitcoin without Congressional approval.
Bitcoin’s Record Surge and Market Impact
Bitcoin has been on an incredible run, surpassing its previous all-time high of $103,900 on Dec. 5 and peaking at $108,262 Tuesday morning. This year alone, Bitcoin has skyrocketed by 156%, pushing its total market value to an astonishing $2.1 trillion, according to CoinDesk.
For comparison, Ethereum—the second-largest cryptocurrency—has a market cap of $483 billion after reclaiming the $4,000 level but still trails its 2021 highs.
MicroStrategy and Nasdaq 100 Inclusion
MicroStrategy, a major Bitcoin proxy, will officially join the Nasdaq 100 index on Dec. 23. The Nasdaq 100 includes the largest non-financial companies on the Nasdaq composite index. As a result, ETFs like the popular Invesco QQQ Trust will automatically purchase MSTR stock, further driving demand.
On Monday, MSTR shares rose as much as 7% before closing slightly lower. Other crypto-related stocks followed Bitcoin’s rise:
• Coinbase Global (COIN) climbed 1.5%
• Robinhood Markets (HOOD) surged 7.5%
• MARA Holdings (MARA) gained 8.1%
MicroStrategy’s massive Bitcoin investment has paid off handsomely. The company revealed it holds 439,000 Bitcoin purchased for $27.1 billion at an average price of $61,725 per Bitcoin—leaving it with an on-paper profit of approximately $19 billion. Despite its struggling enterprise software business, MicroStrategy boasts a market capitalization of $83 billion.
What’s Next for Bitcoin Investors?
As Bitcoin smashes records and speculation intensifies around Trump’s potential Bitcoin reserve, investors are keeping a close eye on the crypto market. For the latest updates and insights, follow IBD’s The Big Picture column for daily stock market analysis and trends.