Bitcoin Hits New All-Time High Amid Growing Speculation of US Reserve Status

Bitcoin surged nearly 5% in a single day on December 15, reaching an all-time high above $106,000, fueled by mounting speculation that the cryptocurrency could soon become a reserve asset of the United States. This rally follows growing expectations of a December rate cut by the Federal Reserve and the possibility of a pro-Bitcoin stance from former President Donald Trump, who has hinted that he could make Bitcoin a US reserve asset from "day one" if he returns to office.
The price of Bitcoin briefly topped $106,500 before retreating slightly to stabilize around $106,000, according to data from TradingView. This marks a new peak for Bitcoin, surpassing its previous high of $104,000 set just 10 days earlier on December 5.
Bitcoin Enters "Santa Claus Mode"
CK Zheng, chief investment officer of ZK Square, believes that Bitcoin has entered what he refers to as "Santa Claus mode," a period where investors, driven by fear of missing out (FOMO), rush to allocate capital into the asset class. Zheng forecasts that Bitcoin could rise to $125,000 by early 2025, although he also warns that a 30% correction may follow. Such a pullback would see Bitcoin retreat to around $87,500, as much of the bullish sentiment stemming from the potential political changes under the incoming Trump administration has already been priced in.
Growing Momentum for Bitcoin as a Reserve Asset
As Bitcoin's price continues to climb, momentum for its adoption as a reserve asset grows. Satoshi Action Fund CEO Dennis Porter confirmed that a third Bitcoin reserve bill is currently being drafted at the state level. Porter did not reveal which state would follow Texas and Pennsylvania in introducing such a bill, but he expressed confidence that this trend would continue. "We had Pennsylvania, and we had Texas. And now we have another state coming on board. They sent me the draft, so I know it's real," Porter said during a Dec. 15 X Spaces discussion. He predicts that at least 10 states will eventually introduce similar bills, further cementing Bitcoin’s position in the financial landscape.
Federal Reserve Rate Cut and Institutional Adoption
The upcoming decision by the US Federal Reserve to potentially lower interest rates by 0.25% on December 18 could further boost Bitcoin's price in the coming months. Financial analysts have highlighted that such a move may increase investor demand for alternative assets like Bitcoin as traditional assets face lower yields.
In addition, the Financial Accounting Standards Board (FASB) has introduced new rules allowing institutions to record the value of their cryptocurrency holdings more realistically. This rule, which takes effect for fiscal years beginning after December 15, could encourage institutional adoption of Bitcoin, further contributing to its rising price.
Bitcoin Sentiment at "Extreme Greed"
Bitcoin’s market sentiment has reached "Extreme Greed" on the Crypto Fear and Greed Index, scoring 83 out of 100. This marks the highest level of investor enthusiasm since Bitcoin crossed the $100,000 milestone on December 5. As more favorable regulatory and financial developments unfold, Bitcoin's outlook for the coming months appears increasingly bullish, though analysts caution that corrections are still possible.
In conclusion, Bitcoin's recent rally to new all-time highs is driven by a combination of factors, including speculation about its potential adoption as a reserve asset, expectations of rate cuts by the Federal Reserve, and regulatory changes that may encourage institutional investment. As the cryptocurrency market heats up, Bitcoin's path forward could see continued upward momentum, but also potential pullbacks as market sentiment adjusts.
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