Hajra Naz
On Sunday, Bitcoin reached a historic high of over $80,000, following a rapid surge in the lead-up to the U.S. presidential election. The world’s largest cryptocurrency continued to rise sharply on election night as Trump’s victory became apparent, and it has sustained its momentum since then. This surge in Bitcoin’s price has been viewed by many as a response to the election results and Trump’s evolving support for digital currencies.
A Record-Breaking Year for Bitcoin
Bitcoin has experienced an 80% increase in value this year, vastly outperforming the S&P 500’s 25.7% gain. After briefly touching the $80,000 mark, Bitcoin was trading just below that milestone by mid-morning on Sunday.
Trump’s Pro-Crypto Position: A Boost for Digital Currencies
The crypto industry sees Trump’s victory as a bullish indicator for Bitcoin and other digital assets. Though Trump once expressed scepticism about Bitcoin, even calling it “based on thin air,” he has since become an advocate for the crypto space. His evolving stance contrasts sharply with the Biden administration’s more conservative approach, which focused on regulation and scepticism towards digital currencies.
Trump’s Financial Stake in the Crypto Industry
A major reason for Trump’s newfound enthusiasm for cryptocurrency is his financial interest. In September, Trump and his family launched World Liberty Financial, a crypto venture. During the unveiling of this new business, Trump praised the cryptocurrency industry, describing it as “very young and very growing,” and expressed his belief in its potential.
The Biden Administration’s Cautionary Approach to Crypto
While Trump has embraced crypto, the Biden administration has taken a more cautious stance. SEC Chairman Gary Gensler has voiced concerns about fraud and potential abuses within the crypto industry, labelling parts of the sector as possibly trading unregistered securities. Under Gensler’s leadership, the SEC has filed lawsuits against crypto companies and worked closely with other regulatory bodies, such as the Department of Justice, to target fraudulent activities within the industry.
SEC Actions and Regulation Efforts
The SEC under Gensler’s guidance has been instrumental in shaping the regulatory landscape for digital currencies. Notably, the SEC took legal action against high-profile figures like Sam Bankman-Fried, former CEO of FTX. While Gensler’s agency eventually approved a Bitcoin exchange-traded fund (ETF), this cautious approach highlighted the administration’s regulatory stance, starkly contrasting with Trump’s enthusiasm.
Trump’s Vision for a U.S. Strategic Bitcoin Reserve
In August, Trump proposed creating a national Bitcoin stockpile as a strategic reserve, similar to America’s oil reserves. He argued that cryptocurrencies could “define the future” and advocated for Bitcoin to be “mined, minted, and made in the USA.” This idea underscores Trump’s commitment to establishing the U.S. as a global leader in cryptocurrency.
Support from Elon Musk and Dogecoin’s Rally
Elon Musk, a strong supporter of Trump and an outspoken crypto advocate, has long promoted Dogecoin. Following Trump’s election win, Dogecoin surged by over 20% on Sunday and continued its upward trajectory throughout the previous week. It reflects Musk’s influence and the broader optimism surrounding Trump’s support for cryptocurrency.
Early 2024: Bitcoin and Other Cryptos Rally After Trump’s Election
Bitcoin’s recent rally accelerated further following Trump’s election win. On Nov. 6, Bitcoin surged 8%, setting a new all-time high of over $75,000, a significant increase from its previous record. By mid-week, it topped $76,000. Other major cryptocurrencies, including Ethereum, followed suit, with Ethereum rising 8% from Tuesday night and gaining an additional 8.5% by Thursday afternoon.
Trump’s Long-Term Vision for Cryptocurrency
Trump’s policies have increasingly aligned with pro-crypto ideals, diverging from his initial views. Over the summer of 2019, Trump criticized cryptocurrency, raising concerns about its potential use for illegal activities. However, in 2024, he began positioning himself as a pro-crypto candidate, attracting crypto supporters and investors.
The GOP’s Pro-Crypto Platform
The Republican National Committee (RNC) included cryptocurrency as part of its platform for the 2024 election, emphasizing the right to mine Bitcoin and protect digital assets from government surveillance. Trump’s vice-presidential candidate, Sen. J.D. Vance, is also a crypto advocate, reinforcing the Republican Party’s embrace of digital currencies.
Trump’s Proposed Crypto Policies
During the Bitcoin 2024 conference in Nashville, Trump outlined several crypto-friendly policies aimed at positioning the U.S. as a global crypto superpower. Some of the key proposals include:
- Government Bitcoin Stockpile: Trump proposed retaining the U.S. government’s current Bitcoin holdings as part of a strategic national Bitcoin reserve. While the U.S. government holds over $5 billion in Bitcoin from criminal investigations.
- Crypto Advisory Council: Trump suggested creating a “Bitcoin and crypto presidential advisory council,” which would be made up of industry enthusiasts rather than regulators and aim to establish rules favourable to the crypto sector.
- Blocking a Federal Digital Currency: Trump has repeatedly opposed the idea of a central bank digital currency (CBDC), calling it a “dangerous threat to freedom.” This sentiment reflects his alignment with the U.S. crypto community’s resistance to centralized digital currencies, which they view as a move toward greater government control.
What a Trump Presidency Might Mean for Crypto
The cryptocurrency community is hopeful about Trump’s return to the White House. Adam Blumberg, co-founder of Interaxis, shares this optimism. He believes Trump’s administration may bring clearer regulations to the crypto space. Blumberg also sees potential for new stablecoin laws and better guidelines for crypto projects. Trump has also indicated his intent to remove Gary Gensler from his position as SEC chair, which could significantly impact future regulatory decisions.
Ethics and Trump’s Personal Stake in Crypto
Trump’s recent alignment with cryptocurrency raises ethical concerns, especially considering his investment in World Liberty Financial, a decentralized finance (DeFi) platform allowing people to borrow, lend, and earn interest on crypto. Trump launched this venture with his son and other executives, mere weeks before the election. Critics argue that his direct financial stake in the crypto industry could lead to conflicts of interest, especially as he continues to influence crypto-related policy decisions as president.
Bottom Line: A Favorable but Controversial Future for Crypto Under Trump
Trump’s embrace of digital currency could benefit investors and industry leaders who desire lighter regulations and a pro-crypto agenda. However, ethical concerns over his crypto venture, World Liberty Financial, may continue to spark debate as he assumes office. With the potential for conflicts of interest and market influence, Trump’s impact on cryptocurrency is likely to remain a polarizing topic in the months to come.
