NEW YORK (AP) — Bitcoin climbed to another record as money continues to flow into crypto following Donald Trump’s victory last week.

The world’s largest cryptocurrency rose above $87,000 for the first time on Monday. At around 3:45 p.m., the price of Bitcoin stood at $87,083, up over 28% in the past week alone, according to CoinDesk.

This is part of the rise in cryptocurrencies and crypto-related investments since Trump won the US presidential election last week. Analysts attribute much of the recent gains to the expected “crypto-friendly” nature of the new administration; This can mean greater regulatory clarity and also room for maneuver.

Still as it is Everything in the volatile crypto universeIt is difficult to predict the future. While some are bullish, others continue to warn about investment risks.

Here’s what you need to know.

Cryptocurrency has been around for a while but has come into the spotlight in recent years.

In basic terms, cryptocurrency is digital money. This type of currency is designed to operate over an online network without a central authority; That is, it is generally not backed by any government or banking institution, and transactions are recorded through technology called blockchain.

Although Bitcoin is the largest and oldest cryptocurrency, other assets such as Ethereum, Tether, and Dogecoin have also gained popularity over the years. Some investors see cryptocurrency as a “digital alternative” to traditional money, but it can be very volatile and dependent on larger market conditions.

A big part of this has to do with the results of last week’s election.

Trump was previously crypto skeptic but changed his mind and embraced Cryptocurrencies in this year’s presidential race. He vowed to make the US the “greatest country” crypto capital planet” and create a “strategic reserve” for Bitcoin. His campaign accepted donations in cryptocurrency and met with fans at a bitcoin conference in July. He also founded World Liberty Financial. new venture to trade cryptocurrencies with family members.

Crypto industry players welcomed Trump’s victory and hoped that he could implement the legal and regulatory changes they had long lobbied for. And Trump has previously promised that if elected, he would oust Gary Gensler, the chairman of the Securities and Exchange Commission who has led the U.S. government’s crackdown on the crypto industry. called for more oversight.

“Crypto rebounded as Election Day progressed into the night and it became increasingly clear that Trump would emerge victorious,” Citi analysts David Glass and Alex Saunders wrote in a research note published Friday, pointing to greater industry sentiment about Trump being “crypto-friendly.” . and a potential shift in regulatory support.

Even before the post-election rally, assets like Bitcoin have seen significant gains over the past year. Much of the credit goes to the early success of a new way to invest in wealth: Identify Bitcoin ETFsIt was approved by US regulators in January.

Inflows spot ETFs“It has been the dominant driver of Bitcoin returns for some time, and we expect this relationship to continue in the near term,” Glass and Saunders said. They added that spot crypto ETFs are seeing some of the largest. Entries were recorded in the days following the election.

Cryptoassets like Bitcoin have a history of drastic value fluctuations, which can occur suddenly in ongoing trading all day, every hour, and can happen over the weekend or overnight.

In short, history shows that you can lose money as quickly as you make it. Long-term price behavior depends on larger market conditions.

At the beginning of the COVID-19 pandemic, Bitcoin was just over $5,000. Its price rose to around $69,000 as of November 2021 during a period of high demand for technology assets, but later fell during the Federal Reserve’s series of aggressive interest rate hikes aimed at containing inflation. Then came 2022 FTX collapseThis has significantly undermined trust in crypto in general.

At the beginning of last year, a single bitcoin could be purchased for less than $17,000. But investors started lots of returns As inflation cooled, earnings rose rapidly thanks to the anticipation and subsequent early success of spot ETFs. Although some cryptocurrency supporters see the potential for more record-breaking days, experts still emphasize the need for caution, especially for investors with small pockets.

“Investors should only deal with cryptocurrency with money they can stand to lose,” said Susannah Streeter, Currency and Markets Manager at Hargreaves Lansdown. he said last week. “Because we’ve seen these wild swings in the past.”

Assets like Bitcoin are produced through a process called “mining.” consumes a lot of energy. Operations that rely on polluting sources have also caused particular concern over the years.

Recent research published by the United Nations University and the journal Future of the World found that the carbon footprint of 2020-2021 Bitcoin mining in 76 countries was equivalent to the emissions from burning 84 billion pounds of coal or operating 190 natural gas-fired power plants. Coal met the bulk of Bitcoin’s electricity demand (45%), followed by natural gas (21%) and hydropower (16%).

Energy Information Administration in the USA notes He added that crypto mining across the country has “grown very rapidly over the last few years” and that grid planners have begun to express concerns about associated increases in electricity demand. Preliminary estimates released by the EIA in February show that annual electricity use from crypto mining likely represents 0.6% to 2.3% of U.S. electricity consumption.

Environmental impacts of Bitcoin mining It largely depends on the energy source used. Industry analysts suggest that the use of clean energy has increased in recent years, coinciding with increasing calls for climate protection from regulators around the world.

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AP Business Writer Kelvin Chan contributed to this report from London.