How Trump's Victory Could Propel Bitcoin to New Heights

Summary:

Bitcoin surpassed $100,000 for the second time, driven by optimism about Trump's presidency.
Trump's administration is expected to create a favorable regulatory environment for cryptocurrencies.
Key appointments like Paul Atkins as SEC chair indicate a pro-crypto agenda.
Advocates are pushing for clear regulations to legitimize cryptocurrencies.
Proposal for a strategic reserve fund for cryptocurrencies could stabilize their value.

Cryptocurrency proponents have plenty to celebrate with President-elect Donald Trump winning a new term. Bitcoin has surpassed $100,000 for the second time, fueled by optimism that the Trump administration will be more supportive of the cryptocurrency industry.

A Favorable Regulatory Environment

“As the election came closer, it became quite clear that if there was going to be a Trump administration, it would essentially be a much more conducive regulatory environment for crypto,” said Eswar Prasad, a professor of trade policy at Cornell University.

In the hours following Election Day, Bitcoin's value jumped 8%, and Dogecoin surged over 18%. With Trump recruiting crypto enthusiasts for his administration, many believe that any regulation related to cryptocurrencies will be very favorable to the industry.

Appointments Indicate Pro-Crypto Agenda

Last week, Trump appointed Paul Atkins, a known crypto advocate, as the chair of the Securities and Exchange Commission (SEC) and David Sacks as the new AI and crypto czar. These moves signal a potential shift in American policy towards cryptocurrencies. Trump has even expressed the ambition to make the U.S. a “crypto capital of the planet.”

The Need for Regulations

While the industry welcomes this pro-crypto stance, advocates are calling for regulations that establish clear rules. “What we want … is to establish clear national rules around crypto markets,” said Faryar Shirzad, chief policy officer of Coinbase. The industry is hoping for regulations that will legitimize cryptocurrencies as financial assets.

Strategic Reserve Fund Proposal

Some supporters propose a strategic reserve fund for cryptocurrencies, similar to the U.S. strategic oil reserve. Trump has suggested that the government should stop auctioning off seized Bitcoin and instead add it to a strategic reserve, which could stabilize its value.

Making the U.S. the ‘Crypto Capital of the World’

At a recent conference, Trump stated his desire to make the United States “the crypto capital of the world.” His son, Eric Trump, echoed this sentiment, claiming that his father would be the “most pro-crypto president in the history of America.”

Risks and Concerns

While there’s optimism about cryptocurrency's future, experts warn that many retail investors may not fully understand the risks involved. Eswar Prasad expressed concern that the endorsement of cryptocurrencies by political figures might mislead new investors into thinking they are as stable as traditional assets like stocks and bonds.

Trump at a Cryptocurrency Conference Republican presidential nominee Donald Trump gestures at the Bitcoin 2024 event in Nashville, Tennessee, U.S., July 27, 2024.