The surge, which has seen the cryptocurrency’s value increase by nearly 10% in just five days, is being fuelled by investor anticipation surrounding a series of pivotal debates by US lawmakers on the future of digital assets.

This week, US legislators are set to discuss three significant pieces of legislation. The Digital Asset Market Clarity Act aims to create a clear regulatory framework for cryptocurrencies. Meanwhile, The Guiding and Establishing National Innovation for US Stablecoins Act (The Genius Act), which has already been approved by the Senate, seeks to establish federal oversight for stablecoins, which are digital currencies pegged to traditional currencies. The potential for major corporations like Amazon and Walmart to issue their own stablecoins under this act has further buoyed market sentiment.

The third bill, The Anti-CBDC Surveillance State Act, proposes to prevent the Federal Reserve from issuing its own central bank digital currency.

Market analysts suggest the recent buying spree indicates a degree of ‘fear of missing out’ (FOMO) among investors, a common phenomenon during periods of significant Bitcoin price movement. The discussions in the US are seen by many as a step towards legitimising the digital asset space, aligning with rhetoric from political figures like Donald Trump who has expressed ambitions for the US to become a global crypto hub.

Beyond the legislative buzz, investors are also turning to Bitcoin as a hedge against wider economic and geopolitical uncertainties, including ongoing trade tariff discussions and concerns over rising US national debt. Traditionally, gold has fulfilled this role as a portfolio diversifier, but Bitcoin is increasingly being seen as a modern alternative. The growing availability of investment funds that track the Bitcoin price has also made it more accessible for a broader range of investors to gain exposure, further driving up demand.

Financial experts caution against the inherent risks associated with cryptocurrency investment. Dan Coatsworth, investment analyst at AJ Bell, highlights the extreme volatility of assets like Bitcoin, stating they “are not suitable for everyone”. He points to 2023 research from the Financial Conduct Authority (FCA) which found that a significant number of new investors are drawn to high-risk crypto assets for emotional reasons, such as novelty or excitement.

The FCA’s study also revealed a worrying trend: half of those investing heavily in high-risk assets exhibit characteristics of financial vulnerability. A significant portion of these investors admitted that a substantial loss would have a fundamental, negative impact on their lifestyle, indicating a clear misalignment between their investment choices and their tolerance for risk.

“Cryptocurrency prices are driven by speculation,” added Mr Coatsworth. Unlike traditional assets such as stocks or bonds, which can be valued based on tangible metrics, “crypto assets involve a huge amount of finger in the air guesswork, and they are at the top of the risk spectrum”.