Bitcoin rose to a record high of $89,000 on Tuesday as investors pumped money into cryptocurrencies following the election of Donald Trump as president of the United States, who has turned from a cypto-skeptic to an investor himself.

Bitcoin, the oldest and largest cryptocurrency, has seen its value increase by 30 percent in the past week. It’s not the only cryptocurrency on the move. Since Trump’s victory, Dogecoin – a coin backed by Trump ally Elon Musk – has risen 152 percent.

Cryptocurrency is a ‘digital alternative’ to traditional money and works online without a central authority. But the economy has also long been highly volatile and has faced government restrictions in various parts of the world.

So how does the crypto spike relate to Trump’s election and will the new US administration relax the regulatory frameworks around crypto?

What explains the crypto boom since Trump’s victory?

Analysts believe that Trump’s embrace of cryptocurrencies during the presidential campaign and his venture into crypto trading has investors expecting the new administration to be crypto-friendly.

The Trump campaign accepted cryptocurrency donations and he also appeared at industry events promising to make the US “the crypto capital of the planet.”

In late September, Trump and his three sons – Donald Jr., Eric and Barron – unveiled his latest entrepreneurial venture, World Liberty Financial. Billed as a decentralized finance (DeFi) money market platform, this new venture introduced its own cryptocurrency called $WLFI.

While the details of the new venture are unclear, many pro-crypto enthusiasts see this as a show of support for digital currencies from the new Trump administration.

The company has drawn criticism from some experts in the DeFi sector due to potential conflicts of interest and the fact that the company was launched during the 2024 presidential campaign.

In a recent interview with Newsweek magazine, Michael Dowling, professor of finance at Dublin City University Business School, stated: “There has been such a parade of undesirables in the crypto and DeFi world that adding Trump to the list is impossible. could move the needle on popularity or enthusiasm. Keep in mind that these markets, the original crypto markets, started out facilitating the drug trade.”

Will all crypto coins rise?

If a rising tide lifts all boats, a rising Bitcoin also lifts all cryptocurrencies. Other popular cryptocurrencies such as Ethereum and Dogecoin are also on the rise.

Musk, the richest man in the world, a prominent Trump supporter and a well-known cryptocurrency enthusiast, has been particularly vocal about his support for Dogecoin.

The market share of the major cryptocurrencies is as follows:

• Bitcoin (BTC): 59.46%
• Ethereum (ETH): 12.68%
• Tether (USDT): 5.18%
• BNB (BNB): 3.51%
• Solana (SOL): 3.38%

Dogecoin (DOGE), USD Coin (USDC), Ripple (XRP), TRON (TRX) are other popular cryptocurrencies.

According to CoinMarketCap, a website that provides data on thousands of cryptocurrencies, the global value of cryptocurrency is $2.79 trillion. In 2013, the total crypto market capitalization was approximately $1 billion.

More than 100 countries allow trading in Bitcoin and other cryptocurrencies, with restrictions, while others have outright bans. The US, Canada, European Union, Singapore, Australia and New Zealand are some countries where trading cryptocurrencies is legal. China, Pakistan, Saudi Arabia, Tunisia and Bolivia have made it illegal to trade cryptocurrencies.

Over the past four years, Bitcoin has experienced significant volatility, with prices fluctuating dramatically due to economic events, market sentiment, and regulatory developments. In March 2020, Bitcoin’s price fell sharply below $5,000 as global markets reeled from the COVID-19 pandemic. This rapid decline was followed by a massive surge in November 2021, reaching an all-time high of nearly $69,000.

However, the crypto markets would experience another downturn following the collapse of the crypto exchange FTX in November 2022. Bitcoin fell sharply below $16,000, and Ethereum fell below $1,100.

What is Trump’s position on Bitcoin?

Trump always saw cryptocurrencies as a threat to the US dollar.

“I am not a fan of Bitcoin and other cryptocurrencies, which are not money and whose value is highly volatile and based on thin air. Unregulated crypto assets can facilitate unlawful behavior, including drug trafficking and other illegal activities,” he posted in 2019 on Twitter, which has since been renamed X.

“We only have one real currency in the U.S., and it is stronger than ever, both trustworthy and reliable.”

That was then, and now Trump, with his newly founded cryptocurrency company World Liberty Financial, has taken a 180 degree turn on his faith in cryptocurrencies, such as Bitcoin and Ethereum.

At the Bitcoin 2024 conference in July, Trump took center stage and made a bold statement about possible future policies. Trump assured the public that, should he regain the presidency, he would take steps to prevent the federal government from liquidating its Bitcoin reserves.

“If elected, it will be the policy of my government, the United States of America, to retain 100 percent of all Bitcoin that the United States government currently owns or acquires in the future,” Trump said.

“If crypto is going to define the future, I want it to be mined, minted and made in the US,” he added.

Mauvis Ledford, CEO of Sogni AI, a Singapore-based technology startup, says the new Trump administration would likely use cryptocurrencies to boost economic growth.

“It is likely that the Trump administration could explore using blockchain technology to increase the transparency and efficiency of government operations, especially with Elon Musk as an advisor. There could also be initiatives aimed at promoting the adoption of cryptocurrencies to boost economic growth and attract technology-driven investments,” Ledford, a former CTO of CoinMarketCap, told Al Jazeera.

However, Ledford remains cautious about how far Trump could go in his support for cryptocurrencies.

“However, I personally don’t believe anything Trump says, and blockchains allow for the creation of rules for everyone to follow, which I don’t think Trump would specifically want in an administration he leads,” Ledford said.

Trump has also trained his guns on US Securities and Exchange Commission (SEC) Chairman Gary Gensler, who is known to be highly critical of the cryptocurrency industry.

“On day one, I will fire Gary Gensler,” Trump said at the Bitcoin conference in Nashville, Tennessee.

The SEC’s focus on crypto matters intensified in 2023, as shown in a January 24 report from Cornerstone Research, a litigation consultancy. The report details 46 enforcement actions last year, resulting in $281 million in monetary penalties for settlements.

“We are trying to enforce the existing laws. … This is a field with a lot of fraudsters, a lot of scammers, a lot of scams,” Gensler said last month during a discussion at the New York University School of Law.

Ledford also acknowledges the many scams, which he calls “smoke and mirrors,” that have infected parts of the cryptocurrency industry.

“The only ‘tokens’ I really trust are Bitcoin and Ethereum. Bitcoin because it was the first creator of blockchain technology, and a simple form of digital gold – literally everything it was intended to be,” Ledford said.

What does the strong increase mean for the American economy?

The recent surge could open the door for more investments in cryptocurrencies.

“The story drives the price. The Biden administration has clamped down on crypto. Trump, who has publicly supported it, is seen as a world where crypto can thrive with government support. Bullish,” said Roderick Melvin Johnson, active crypto investor since 2021.

Johnson, based in Clearwater, Florida, shared with Al Jazeera a major X-thread from Miles Deutscher, a prominent crypto analyst, explaining the significance of the Trump presidency and its potential effect on the US economy.

This is the most obvious bullish setup any liquid market has had in YEARS.

That’s not an exaggeration.

I have the data to show you how the stars are aligning for the biggest crypto bull run EVER.

🧵: The only 10 important factors you need to know.👇

— Miles Deutscher (@milesdeutscher) November 11, 2024

Ledford, the Singapore-based technology CEO, notes that there has been a notable increase in institutional investment in cryptocurrencies, which should push the industry towards mainstream adoption.

“Large companies are integrating crypto payments and advances in blockchain technology are making transactions more secure and efficient. Moreover, regulatory frameworks are evolving, which could bring greater stability and legitimacy to the crypto market,” he explained.

What is Bitcoin?

Created in 2009 under the pseudonym Satoshi Nakamoto, Bitcoin is a digital currency traded exclusively online. Using a technology called blockchain, every Bitcoin transaction can be stored on thousands of computers around the world, known as the “public record,” making it virtually impossible to hack.

Each computer stores every transaction that has ever been performed, which is known as a node. Whenever a new cryptocurrency transaction occurs anywhere in the world, each node will have its ‘public record’ updated. Due to the decentralized nature of blockchain, no single computer controls the data.

To this day, the creator of Bitcoin is unknown.

In 2010, the first real purchase with Bitcoin was two pizzas bought for 10,000 Bitcoins, about $41 at the time, by a programmer named Laszlo Hanyecz.

In 2021, Bitcoin’s largest transaction was the sale of a luxurious mansion in Miami, Florida. The property changed hands for a whopping $22.5 million, paid entirely in cryptocurrency.