If it seems everyone is talking about bitcoin these days, you’re onto something.

The digital currency has been hitting record highs and neared $100,000 this past week, having doubled in value throughout 2024. Launched in 2009, bitcoin is the first cryptocurrency, meaning that it’s a digital currency and does not rely on banks to verify transactions.

Bitcoin’s surge – up about 130% this year – is one of the “Trump trades,” market moves that have kicked in since former President Donald Trump’s victory in the Nov. 5 election.

Trump has dabbled in cryptocurrency – releasing crypto-based digital trading cards – and Trump Media and Technology Group, which operates Truth Social, is reportedly close to acquiring crypto trading firm Bakkt. The Trump family launched its own crypto firm, World Liberty Financial, in September.

Investors have wagered Trump’s support for bitcoin and other digital assets will lead to fewer restrictions on the industry. During the presidential campaign, Trump said he would make America the “world capital for crypto and bitcoin.”

Trump has tapped Tesla CEO and SpaceX founder Elon Musk to co-lead, with Vivek Ramaswamy, the new Department of Government Efficiency, or D.O.G.E. It’s an acronym for cryptocurrency called Dogecoin, which Musk supported as it became a phenomenon in 2021. 

Been hit with the bitcoin buzz, but don’t quite understand it? Here’s some bitcoin basics.

What is ‘Doge’?: Explaining the meme and cryptocurrency after Elon Musk’s appointment to D.O.G.E.

What is bitcoin?

Bitcoin is a digital asset, launched in 2009 by a person or group known as Satoshi Nakamoto and designed to have a cap of 21 million bitcoin tokens. Bitcoin is created as crypto miners use their computing work to validate bitcoin transactions on its decentralized blockchain network, essentially a digital ledger meant to prevent fraud. As the crypto miners work, they earn bitcoin.

So far, about 19 million tokens have been released. In April, bitcoin underwent a “halving,” which kicks in about every four years to reduce the rate at which new bitcoins are created and released into circulation. As the bitcoin cap of 21 million tokens nears, demand likely increases, according to Investopedia.

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Bitcoin prices hovered around $98,608 on Saturday on international exchanges, buoyed by the euphoria over Donald Trump-led Republican party reclaiming the White House. With its total market cap touching more than two trillion dollars, the oldest cryptocurrency has witnessed a spike of 51 per cent in the past one month.

There is hope that the Donald Trump-led US administration will adopt crypto-friendly policies when it takes over in January next year for its second term. The rally got further impetus when BlackRock’s spot Bitcoin ETF options were listed on Nasdaq on Tuesday.

Indian crypto industry insiders are naturally upbeat about this rally. Balaji Srihari, Business Head of CoinSwitch, says, “Bitcoin surged to an all-time high, signalling that the much-anticipated $100,000 milestone could be within reach- many analysts predict that this mark could be achieved as early as the end of November. Since the recent US election, Bitcoin has been consistently setting new records, encouraged by expectations of a more supportive regulatory framework and a potential national Bitcoin reserve; that can legitimise Bitcoin as a government-backed asset. BlackRock’s Bitcoin ETF debuting options trading on Nasdaq is a big sign of increasing crypto adoption.”

Apart from bitcoin, other crypto tokens too have witnessed a surge. XRP, for instance, has surged 188 per cent in the past one month, and 37 per cent in the past five days alone. Ether trades at $3,354 and BNB trades at $665 on Saturday, according to Coinmarketcap data. 

Shivam Thakral, CEO of BuyUcoin, says, “In the last 24 hours, Bitcoin reached a record high of $99,000. XRP led the charge with a remarkable 25 per cent increase, driven by renewed optimism surrounding a more crypto-friendly regulatory environment in the US. It is anticipated that Donald Trump’s win in the election will drive the implementation of crypto-friendly policies, which will, in turn, enhance market sentiment. As trading volumes rise and hopes for ETF approvals increase, the future looks extremely positive for XRP and the wider cryptocurrency market as we near the end of the year.”

Vishal Sacheendran, Head of Regional Markets at Binance, says, “Bitcoin’s rally, fuelled in part by the optimism surrounding Donald Trump’s re-election, represents a transformative moment for the crypto and Web3 space. His administration’s support for digital assets could lead to more progressive regulations, fostering an environment conducive to greater institutional and retail investment in the sector. I believe that the broader crypto ecosystem could benefit from policies that promote blockchain infrastructure, and provide a better route for financial institutions to engage with crypto.”

Caution needed

Despite all the positive factors, crypto experts believe that investors should stay cautious and not get too carried away. It is common knowledge that bull runs are often followed by steep corrections. So, one should be cautious before getting too elated. “Amid the excitement, traders should stay cautious. Big price jumps often lead to sharp corrections, and using too much leverage could amplify risks during volatile periods,” says Srihari from Coinswitch.

“It is also important to note that in a bull market like this, investors should also remain mindful, conduct thorough research, and not make investment decisions solely based on market sentiment or hype,” adds Sacheendran of Binance.