New York (AP) — Bitcoin has achieved a significant milestone by topping the $100,000 mark. This massive rally in the world's most popular cryptocurrency is fueled by the election of Donald Trump and continues to gain momentum. Just hours after the President-elect signaled a lighter regulatory approach, Bitcoin soared to unprecedented heights. It climbed from $69,374 on Election Day to as high as $103,713 on Wednesday. However, the question remains: how long will Bitcoin stay above this mark? It fell back to just under $102,000 early Thursday. As with everything in the volatile cryptoverse, the future is unpredictable.

Unraveling the Mysteries and Risks of Bitcoin's Ascent

Back up. What is Cryptocurrency Again?

Cryptocurrency has been in existence for some time. In recent years, it has gained significant attention. In simple terms, it is digital money that operates through an online network without a central authority. It is not backed by any government or banking institution and transactions are recorded using blockchain technology. Bitcoin is the largest and oldest cryptocurrency, but other assets like Ethereum, Tether, and Dogecoin have also become popular. While some investors view cryptocurrency as a digital alternative to traditional money, the majority of daily financial transactions still use fiat currencies. Bitcoin's price is highly volatile and depends on larger market conditions.

For example, during the COVID-19 pandemic, Bitcoin started at just over $5,000. By November 2021, its price climbed to nearly $69,000 due to high demand for technology assets. But later, it crashed during a series of aggressive rate hikes by the Federal Reserve. The late-2022 collapse of FTX also significantly undermined confidence in cryptocurrency, causing Bitcoin to fall below $17,000.

Why is Bitcoin Soaring?

A significant part of the recent surge in Bitcoin's price is related to the outcome of the U.S. presidential election. Trump, who was initially a crypto skeptic, has pledged to make the U.S. the "crypto capital of the planet" and create a "strategic reserve" of Bitcoin. His campaign accepted donations in cryptocurrency and he attended a bitcoin conference in July. He also launched World Liberty Financial to trade cryptocurrencies.

Crypto industry players have welcomed Trump's victory, hoping for regulatory changes that would increase legitimacy without excessive red tape. On Wednesday, Trump signaled a move in this direction by nominating Paul Atkins to chair the Securities and Exchange Commission. Atkins was an SEC commissioner during the George W. Bush presidency and has been an advocate for less market regulation. Under current chair Gary Gensler, the SEC has cracked down on the crypto industry, penalizing several companies. But he has also faced criticism from industry players. Gensler will step down when Trump takes office. One crypto-friendly move made under Gensler was the approval of spot Bitcoin ETFs in January, which allowed investors to have a stake in Bitcoin without directly buying it. These ETFs were the main driver of Bitcoin's price before the election and saw record inflows post-election.

What are the Risks?

History shows that one can lose money in crypto just as quickly as they made it. Long-term price behavior depends on larger market conditions, and trading occurs 24/7. During the COVID-19 pandemic, Bitcoin's price rose from $5,000 to nearly $69,000 but then crashed due to the Federal Reserve's rate hikes. The 2022 collapse of FTX further undermined confidence in cryptocurrency.

Experts stress caution, especially for small investors. Lighter regulation from the incoming Trump administration could mean fewer safeguards. Adam Morgan McCarthy, a research analyst at Kaiko, advises keeping it simple and not taking on more risk than one can afford. There is no certainty about what will happen next.

What about the Climate Impact?

Assets like Bitcoin are produced through a process called "mining," which consumes a lot of energy. Operations relying on pollutive sources have raised concerns over the years. Recent research found that the carbon footprint of 2020-2021 Bitcoin mining across 76 nations was equivalent to the emissions from burning 84 billion pounds of coal or running 190 natural gas-fired power plants. Coal satisfied a large portion of Bitcoin's electricity demands (45%), followed by natural gas (21%) and hydropower (16%).

However, environmental impacts of Bitcoin mining mainly depend on the energy source used. Industry analysts have noted that the use of clean energy has increased in recent years, coinciding with calls for climate protection.