NEW YORK – Bitcoin surpassed $98,000 for the first time on Thursday, extending a streak of near-daily highs since the U.S. presidential election. The cryptocurrency has soared more than 40% in just two weeks.

Today, bitcoin is on the cusp of $100,000 and investors don’t seem to be phased by gravity or cautionary tales about the history of cryptocurrency volatility.

Cryptocurrencies and related investments, such as exchange-traded funds, have rallied because the new Trump administration is expected to be more “crypto-friendly” than the outgoing Biden administration.

As of 8:30 a.m. ET, bitcoin was trading at $97,466 after hitting $98,349 according to CoinDesk.

Still, cryptocurrency markets remain a wild place and it’s impossible to know what’s next. And while some are optimistic, other experts warn of investment risks.

Here’s what you need to know.

Backup. What is cryptocurrency anyway?

Cryptocurrencies have been around for a while now, but they have been in the spotlight in recent years.

Simply put, cryptocurrency is digital money. This type of currency is designed to operate through an online network without a central authority – meaning it is generally not backed by any government or banking institution – and transactions are recorded using a technology called blockchain .

Bitcoin is the largest and oldest cryptocurrency, although other assets like Ethereum, Tether, and Dogecoin have gained popularity over the years. Some investors view cryptocurrency as a “digital alternative” to traditional money – but it can be very volatile, with its price dependent on broader market conditions.

Why are bitcoin and other crypto assets skyrocketing?

Much of the recent action is linked to the outcome of the US elections.

Trump transformed from a crypto skeptic to a crypto champion and pledged to make the United States “the crypto capital of the planet” and create a “strategic reserve” of bitcoin. His campaign accepted cryptocurrency donations, and he courted fans at a Bitcoin conference in July. He also launched World Liberty Financial, a new company with members of his family to trade cryptocurrencies.

Crypto industry players welcomed Trump’s victory, hoping that he will be able to push through the legislative and regulatory changes they have long called for. Trump had also promised that, if elected, he would remove Securities and Exchange Commission Chairman Gary Gensler, who led the US government’s crackdown on the crypto industry and has repeatedly called for more monitoring.

Digital assets like bitcoin saw notable gains in the months leading up to the election, largely due to the early success of a new way to invest in the asset: spot bitcoin ETFs, which were approved by regulators Americans in January.

Inflows into spot ETFs “have been the dominant driver of Bitcoin returns for some time, and we expect this relationship to continue in the near term,” Citi analysts David Glass and Alex Saunders wrote in a research note two weeks ago. They added that spot crypto ETFs saw some of their largest inflows on record in the days following the election.

In April, bitcoin also experienced its fourth “halving” – a pre-programmed event that impacts production by halving the reward for mining, or creating new bitcoin. When this reward decreases, the number of new bitcoins entering the market also decreases. And if demand remains strong, some analysts say this “supply shock” can also help propel prices in the long term.

What are the risks?

History shows that you can lose money in crypto just as quickly as you made it. Long-term price behavior is based on broader market conditions. Exchanges continue at all hours, every day.

At the start of the COVID-19 pandemic, bitcoin stood at just over $5,000. Its price rose to nearly $69,000 in November 2021, during a time of high demand for tech assets. Bitcoin then collapsed during an aggressive series of rate hikes from the Federal Reserve aimed at curbing inflation. The collapse of FTX in late 2022 significantly undermined overall confidence in crypto and bitcoin fell below $17,000.

Investors began returning in large numbers as inflation began to ease – and gains soared on the anticipation and then early success of cash ETFs. Experts still stress caution, especially for investors with small pockets.

What about the climate impact?

Assets like bitcoin are produced through a process called “mining,” which uses a lot of energy. And operations relying on polluting sources have caused particular concern over the years.

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

The environmental impacts of bitcoin mining largely depend on the energy source used. Industry analysts say the use of clean energy has increased in recent years, coinciding with growing calls for climate protection.