NEW YORK (AP) — Bitcoin has topped $100,000 for the first time in the world’s most popular cryptocurrency in a massive rally, largely fueled by the election of Donald Trump.

The cryptocurrency officially surged into the six figures on Wednesday night, hours after the president-elect said Plans to Nominate Cryptocurrency Lawyer Paul Atkins for the next chairmanship of the Securities and Exchange Commission.

Bitcoin has rallied since Trump won the US presidential election on November 5. According to CoinDesk, assets rose to $103,713 on Wednesday from $69,374 on Election Day. And just two years after bitcoin fell below $17,000, it reached its latest all-time high. The End of Crypto Exchange FTX.

Bitcoin fell below $101,000 as of Thursday afternoon. Even amid a massive rally that has more than doubled bitcoin’s value this year, some experts continue to warn of the risks of investing around the asset, which has had a fairly volatile history.

Here’s what you need to know.

Backup. What is cryptocurrency again?

Cryptocurrency has been around for a while now. But chances are you’ve heard more and more about it over the past few years.

In basic terms, cryptocurrency is digital money. This type of currency is designed to operate through an online network without a central authority — meaning it’s usually not backed by a government or banking institution — and transactions are recorded using a technology called blockchain. is recorded with

Bitcoin is the largest and oldest cryptocurrency, although other assets such as Ethereum, XRP, Tether and dogecoin It has also gained popularity over the years. Some investors see cryptocurrency as a “digital alternative” to traditional money, but the vast majority of daily financial transactions are conducted using fiat currencies such as the dollar. In addition, Bitcoin can be very volatile, with its price depending on larger market conditions.

Why is Bitcoin rising?

Much of the recent action has to do with the outcome of the US presidential election.

Trump, once a crypto-skeptic, has vowed to build America. “The Crypto Capital of the Planet” And create a “strategic reserve” of Bitcoin. His campaign accepted donations in cryptocurrency and he presented to fans at the Bitcoin Conference in July. He also launched World Liberty Financial, a new venture for trading cryptocurrencies with family members.

On Thursday morning, hours after Bitcoin crossed the $100,000 mark, Trump Congratulations “BITCOINERS” on their social media platform Truth Social. He also appeared to take credit for the recent rally, writing, “You’re welcome!!!”

Top crypto players welcomed Trump’s election victory last month, hoping that he would be able to push through the legislative and regulatory changes they have long lobbied for – which, in general, , aims for a growing sense of legitimacy without too much red tape. And the industry has invested a lot along the way. In August, Public Citizen, a left-leaning consumer rights nonprofit, reported that crypto-sector corporations spent more than $119 million to support pro-crypto candidates in the 2024 federal election.

Trump made his latest pro-crypto move when he announced his plans to nominate Atkins to lead the SEC on Wednesday. Atkins was an SEC commissioner during the presidency of George W. Bush. In the years since leaving the agency, Atkins has made the case against too much market regulation. He joined the cryptocurrency advocacy organization Token Alliance in 2017.

Under current chair Gary Gensler, Jr Will leave the step Since Trump took office, the SEC has cracked down on the crypto industry — fining a number of companies for violating securities laws. Gensler has also faced a lot of criticism from industry players in the process.

One crypto-friendly move the SEC made under Gensler was the January approval of spot bitcoin ETFs, or exchange-traded funds, which allow investors to participate in bitcoin without buying it directly. Spot ETFs were the dominant driver of bitcoin’s price before Trump’s win — but, like the crypto’s recent momentum, saw record inflows after the election.

What does bitcoin reaching $100k mean? Can it keep climbing?

Bitcoin has created much of the buzz in the crypto world by crossing the sought-after $100,000 mark.

“What we’re seeing isn’t just a rally — it’s a fundamental transformation of bitcoin’s place in the financial system,” Nathan McCauley, CEO and co-founder of crypto custodian Anchorage Digital, said in a statement. Pointing to who is entering the market, especially with increasing institutional adoption.

Still, others noted that new bitcoin price highs don’t necessarily mean the asset is going mainstream. The $100,000 level is “just a psychological factor and ultimately just a number,” Dan Coatsworth, an investment analyst at British investment firm AJ Bell, wrote on Thursday. Tafsir.

That being said, bitcoin could continue to climb to more all-time highs — especially if Trump follows through on his promises for more crypto-friendly regulation once in office. If Trump actually builds bitcoin reserves, for example, a change in supply could also drive the price.

Yet, as with everything in the volatile cryptoverse, the future is never promised. Global regulatory uncertainty and environmental concerns surrounding bitcoin “mining” – the creation of new bitcoins, which Consumes a lot of energy – Factors that analysts like Coatsworth note could inhibit future growth include: And, as a relatively young asset with a history of volatility, long-term adoption remains to be seen.

Is it too late to invest? What are the risks?

Today’s excitement around bitcoin has many people not already in the space wanting to get in on the action, but crypto experts continue to stress caution about “FOMO,” or the fear of missing out, especially For investors with smaller pockets.

“Many people have gotten rich off the rise in cryptocurrency this year, but this high-risk asset isn’t for everyone,” Coatsworth noted Thursday. “It’s volatile, unpredictable and driven by speculation, none of which invests in gold at night.”

In short, history shows that you can lose money in crypto as quickly as you make it. Long-term price behavior depends on larger market conditions. Trading goes on every day, all the time.

Coatsworth pointed to recent research by the Bank for International Settlements, a Switzerland-based global organization of central banks. found That nearly three-quarters of retail buyers on crypto exchange apps lost money on their bitcoin investments between 2015 and 2022.

At the start of the COVID-19 pandemic, Bitcoin was worth just over $5,000. Its price peaked around $69,000 by November 2021 amid high demand for technology assets, but later crashed amid an aggressive series of rate hikes by the Federal Reserve. And the collapse of FTX at the end of 2022 significantly undermined confidence in crypto as a whole, with Bitcoin falling below $17,000.

Investors began to return in droves as inflation began to cool — and gains skyrocketed on expectations of the initial success of spot ETFs and, again, the post-election frenzy. But lighter regulation from the incoming Trump administration could also mean fewer guardrails.

“I would say, keep it simple. And don’t take more risk than you can afford,” said Adam Morgan McCarthy, a research analyst at Caico. Told before Associated Press – added that there is no “magic eight ball” to know for sure what will happen next.

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This story has been corrected to refer to Anchorage Digital as the crypto custodian, not the crypto asset manager.