Bitcoin (BTC-USD) approached a new all-time high on Tuesday as investor enthusiasm grew over expectations that a second Trump administration would maintain a favorable stance toward the crypto industry. Momentum has also been fueled by a wave of corporate adoption, with more companies adding bitcoin to their balance sheets.
As of 1 p.m. ET, bitcoin was trading just under $109,000, roughly $3,000 shy of its intraday record set in May.
A major contributor to the rally has been the increasing number of public companies adopting the so-called “bitcoin standard.”
“Over time, bitcoin has proven itself to be a better hedge against inflation than many other asset classes,” said Elliot Johnson, CEO of Bitcoin Treasury Corp., which provides institutional bitcoin lending services.
Johnson highlighted the cryptocurrency’s long-term performance:
“Over the past five years, bitcoin is up over 1,000% while gold has returned about 92.5%,” he said.
“Meanwhile, the US dollar has lost more than 20% of its value over the last five years due to inflation.”
Still, some warn that corporate strategies modeled after large-scale bitcoin buyers carry significant financial risks.
“The main risk in running a leveraged ‘bitcoin treasury’ strategy is that a rapid drop in the price of bitcoin would lead to a possibility of bankruptcy,” David Yermack, a professor at NYU’s Stern School of Business, told Yahoo Finance.
Shares of Strategy (MSTR)—a major corporate bitcoin holder—rose over 4% on Monday following the company’s disclosure that it purchased 1,045 additional tokens between June 2 and June 8. The firm’s total bitcoin holdings now exceed $62 billion, according to Bloomberg.
However, replicating Strategy’s model may not be feasible for most companies.
“[Strategy]’s scale is hard to replicate,” wrote Bernstein analyst Gautam Chhugani in a May note.
“Not every Bitcoin treasury will be successful simply replicating [Strategy]’s playbook, in our view.”
In contrast, Trump Media & Technology Group (DJT) saw its shares plunge more than 10% in a single May session after announcing plans to build what it called one of the largest bitcoin treasuries held by a public company.
Similarly, GameStop (GME) shares tumbled nearly 25% in March after disclosing a plan to raise $1.3 billion to purchase bitcoin.
So far, approximately 80 companies have adopted bitcoin as a treasury asset, collectively holding about 3.4% of the token’s circulating supply, according to Bernstein.
“Bitcoin is great, we love it and still believe $200K is our high-conviction but conservative price forecast this cycle,” Chhugani wrote in a Monday note.
Bitcoin has climbed more than 55% since Donald Trump’s election victory last November, as optimism grows over a crypto-friendly regulatory landscape. Trump has pledged to support the industry, beginning with appointing a pro-crypto advocate to lead the Securities and Exchange Commission and naming a “crypto czar.”
Pending legislation in Congress to regulate stablecoins—U.S. dollar-backed digital assets—has further bolstered sentiment. Senate Republicans are pushing to pass the bill later this week.
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