Bitcoin (BTC-USD) climbed to a new high on Tuesday as investors continued to bet on the Trump administration’s friendly stance toward the cryptocurrency industry and more companies added cryptocurrencies to their balance sheets.
As of 1 p.m. ET, the token was trading just below $109,000, about $3,000 away from its all-time intraday high in May.
Dozens of public companies have jumped on the Bitcoin bandwagon, driving widespread adoption.
“Bitcoin has proven itself to be a better hedge against inflation over time than many other asset classes,” said Elliot Johnson, CEO of institutional Bitcoin lending service Bitcoin Treasury Corp.
Over the past five years, Bitcoin has risen more than 1,000%, while gold has risen about 92.5%, Johnson noted.
“Meanwhile, the dollar has lost more than 20% of its value over the past five years due to inflation,” Johnson said.
However, the approach pioneered by Strategy and followed by dozens of companies also has risks.
“The primary risk of implementing a leveraged ‘bitcoin treasury’ strategy is that a rapid decline in bitcoin prices could lead to bankruptcy,” David Yermack, a professor at New York University’s Stern School of Business, said in a recent interview with Yahoo Finance.
Shares of bitcoin giant Strategy (MSTR) rose more than 4% on Monday after the company said it bought an additional 1,045 tokens from June 2 to June 8, with total holdings now valued at more than $62 billion, according to Bloomberg data.
But “(Strategy’s) scale will be difficult to replicate,” Bernstein analyst Gautam Chhugani wrote in a May report. “In our view, not all bitcoin vaults will be able to simply copy (Strategy’s) strategy and succeed.”
Shares of Trump Media & Technology Group (DJT) fell more than 10% in a single trading day in May after the Trump-backed company announced plans to create what it claims will be one of the largest bitcoin treasuries held by any public company.
GameStop (GME) shares also fell nearly 25% immediately after the company announced in March that it would raise $1.3 billion to buy bitcoin.
About 80 companies have adopted the so-called Bitcoin Standard, adding bitcoin to their balance sheets. According to Bernstein’s analysis, companies currently hold about 3.4% of all circulating tokens.
“Bitcoin is great, we like it, and continue to believe $200,000 is our high-conviction but conservative price forecast for this cycle,” Bernstein’s Chhugan wrote on Monday.
Cryptocurrencies have risen more than 55% since Trump was elected president in November last year and promised a crypto-friendly framework.
Trump’s first order of business after returning to the White House was to appoint a crypto-friendly figure as chairman of the U.S. Securities and Exchange Commission and to appoint a crypto czar.
Optimism in the cryptocurrency space has been boosted by legislation in the U.S. Congress that, if passed, would regulate stablecoins, digital assets backed by the U.S. dollar. Senate Republicans plan to pass the bill this week.
