Bitcoin surged above $87,000 in Monday’s Asian trading session, driven by Donald Trump’s victory in the U.S. election and the anticipation of pro-crypto candidates gaining seats in Congress, which raised hopes for a more favorable regulatory environment. The world’s largest cryptocurrency jumped by as much as 7%, surpassing its previous record high of $81,464 set on January 23, and has now risen 94% this year.

The rally was further fueled by the liquidation of many short positions. According to CoinGecko data, around $180 million in bitcoin short positions were wiped out in the past 12 hours, with traders on the Bitfinex exchange suffering the largest losses. Bitcoin shorts have fallen nearly 6% since last week.

Analysts believe the election result and a more positive outlook for crypto markets will lead to a wave of institutional investments, boosting demand for digital assets and ultimately driving prices higher. “As institutions invest more into the market, it will increase their confidence in the ecosystem, resulting in price appreciation,” said Sumit Gupta, co-founder at CoinDCX, a blockchain platform. Edul Patel, CEO of Mudrex, agreed. “Steady ETF inflows, rising global liquidity, a more positive economic outlook, recent rate cuts, and easing regulatory frameworks have all contributed to this rally,” he said.

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President-elect Trump embraced digital assets during the campaign, vowing to turn the United States into the “bitcoin capital of the world” and launch a national cryptocurrency stockpile. He also tapped into his deep connections with the tech industry, including Tesla’s chief executive, Elon Musk, who backs the crypto sector.

In addition, the incoming administration will likely cut interest rates, which could boost loan and economic growth by making it cheaper to borrow money. The Federal Reserve is widely expected to cut its key rate by 0.25% when it meets later this month.

A rise in interest rates typically drives up bond yields, which make government debt less attractive to investors and can push up inflation, a key concern for the central bank. However, investors will still be wary of inflation and inflation expectations, especially with the global economy continuing to recover from the financial crisis. That could dampen the Fed’s desire to cut interest rates. The Fed’s next meeting takes place in mid-December when its policymakers are expected to weigh the impact of a strong dollar on the economy and inflation. The policymakers will also look at signs that global economic growth is picking up steam and the pace of job creation.