In an impressive move, Bitcoin – the leading cryptocurrency – set a new record by surpassing the $123,000 mark on Monday, marking a strong boom phase of the global cryptocurrency market. Specifically, Bitcoin reached $123,200, up nearly 15% in a month and has recorded an increase of over 90% year-to-date.
US Congress Launches 'Crypto Week'
The strong price increase of Bitcoin coincides with the US Congress launching 'Crypto Week', a series of hearings and debates surrounding new bills aimed at removing legal barriers that have hindered the development of the cryptocurrency industry for many years.
One of the prominent bills is the GENIUS Act, which aims to establish a legal framework for stablecoins – a type of digital currency pegged to fiat currencies like the USD. Proponents of the GENIUS Act argue that this is a significant step forward aimed at:
Enhance consumer protection,
Attract traditional financial institutions,
And promote the sustainable development of the cryptocurrency market.
However, opponents assess the GENIUS Act as 'too lenient,' not strong enough to prevent fraudulent activities or illegal trading related to stablecoins.
Towards a Clear Legal Framework
In addition to the GENIUS Act, the US Congress will also discuss other legislative drafts aimed at:
Clarify the roles and authorities of federal agencies in managing digital assets,
Prevent the Federal Reserve (Fed) from issuing its own digital currency.
Mr. Bryan Armour, Director of Passive Investment Strategy Research at Morningstar, stated that these legislative activities reflect positive changes for the crypto sector since Donald Trump was re-elected President in November. Since then, Bitcoin's price has increased by nearly 80%.
Trump and Concerns About Conflicts of Interest
Although current policies are supporting the cryptocurrency market, Trump's involvement has also raised some concerns. In particular, his public support for USD1 – a stablecoin issued by World Liberty Financial – has led to a wave of investment in exchanges like Binance. Critics argue that this could be a conflict of interest, as the Trump family may financially benefit from related transactions.
Nevertheless, Trump denies all allegations and the White House has confirmed that his assets are being managed through a trust fund to avoid conflict of interest risks.
Bitcoin ETF – A Driving Factor for Growth
A key factor contributing to pushing Bitcoin's price to a record high is the explosion of Bitcoin ETF funds after being approved in the US last year. These funds have attracted significant cash flow from institutional and individual investors, creating a strong spillover effect.
The total assets under management (AUM) of Bitcoin ETFs have surpassed $158 billion, with over $1 billion in capital flowing in daily for many consecutive days.
According to finance professor Nikhil Bhatia at the University of Southern California, ETFs are the 'key to opening doors' for institutional investors to participate in the market, while also activating a new wave of optimism in the global crypto community.
Conclusion
Bitcoin is entering an extremely prosperous period thanks to the combination of policy push, cash flow from ETFs, and expectations for a clearer legal framework in the US. However, investors still need to be cautious of potential risks related to politics and legal issues in the current sensitive phase.
