Why Trump’s election as U.S. president will trigger a surge in Bitcoin? | News | Al Jazeera
Investors have poured money into cryptocurrencies following the election of Donald Trump as U.S. president, with Bitcoin prices soaring to a record high of $89,000 on Tuesday and Trump himself transforming from a crypto skeptic to a investor.
Bitcoin, the oldest and largest cryptocurrency, has gained 30% in value over the past week. It’s not the only cryptocurrency rising. Dogecoin, a currency backed by Trump ally Elon Musk, has surged 152% since Trump’s victory.
Cryptocurrencies are “digital alternatives” to traditional currencies that operate online without the need for a central authority. But cryptocurrencies have long been highly unstable and subject to government restrictions in many parts of the world.
So how does the surge in cryptocurrency relate to Trump’s election? Will the new U.S. administration relax the regulatory framework for cryptocurrencies?
How to explain the surge in cryptocurrencies since Trump’s victory?
Analysts believe Trump’s embrace of cryptocurrencies during the presidential campaign and his move into cryptocurrency trading attracted investors as they expected the new administration to be crypto-friendly.
The Trump campaign has accepted cryptocurrency donations and he has appeared at industry events pledging to make the United States the “crypto capital of the planet.”
At the end of September, Trump and his three sons – Donald Jr., Eric and Barron – unveiled his latest entrepreneurial project, World Liberty Financial. The new venture, dubbed a decentralized finance (DeFi) money market platform, has launched a proprietary cryptocurrency called $WLFI.
Although the details of the new project are unclear, many pro-crypto enthusiasts believe it is an endorsement of digital currencies by the incoming Trump administration.
The project has drawn criticism from some experts in the DeFi space, citing possible conflicts of interest and the fact that it was founded during the 2024 presidential campaign.
Michael Dowling, professor of finance at Dublin City University Business School, said in a recent interview with Newsweek: “There are too many unpopular people in the cryptocurrency and DeFi world, even if Trump is added to the list. It’s impossible to increase their popularity or enthusiasm, remember, these markets, the original cryptocurrency markets, started with drug trafficking.”
After US President-elect Donald Trump entered the White House, the prices of other cryptocurrencies also continued to surge, with the price of Bitcoin surpassing $88,000. Cryptocurrencies are expected to flourish under a favorable regulatory environment under a Trump presidency. (Al Jazeera)
Are all cryptocurrencies rising?
If a rising tide lifts all boats, then a rise in Bitcoin will lift all cryptocurrencies as well. Other popular cryptocurrencies such as Ethereum and Dogecoin also rose.
Musk, the world’s richest man, a prominent Trump supporter and a well-known cryptocurrency enthusiast, has been particularly vocal in his support of Dogecoin.
The market shares of the major cryptocurrencies are as follows:
- Bitcoin (BTC): 59.46%
- Ethereum (ETH): 12.68%
- Tether (USDT): 5.18%
- Binance Coin (BNB): 3.51%
- Solana (SOL): 3.38%
Dogecoin (DOGE), USDC (USDC), Ripple (XRP), and Tron (TRX) are other popular cryptocurrencies.
According to CoinMarketCap, a website that provides data on thousands of cryptocurrencies, the global value of cryptocurrencies is $2.79 trillion. In 2013, the total market capitalization of cryptocurrencies was approximately $1 billion.
Over 100 countries allow trading of Bitcoin and other cryptocurrencies with restrictions, while others prohibit it entirely. The United States, Canada, the European Union, Singapore, Australia, and New Zealand are some of the countries where cryptocurrency trading is legal. China, Pakistan, Saudi Arabia, Tunisia and Bolivia have made cryptocurrency trading illegal.
Bitcoin has experienced tremendous volatility over the past four years, with prices swinging wildly in response to economic events, market sentiment, and regulatory developments. In March 2020, as the global market was affected by the COVID-19 epidemic, the price of Bitcoin dropped sharply to below $5,000. This was followed by a sharp rise in November 2021, reaching an all-time high of nearly $69,000.
However, due to the collapse of cryptocurrency exchange FTX in November 2022, the cryptocurrency market will experience another downturn. Bitcoin fell sharply below $16,000, and Ethereum fell below $1,100.
Donald Trump speaks at the Bitcoin 2024 conference in Nashville on July 27, 2024 (AP)What is Trump’s stance on Bitcoin?
Trump once viewed cryptocurrencies as a threat to the U.S. dollar.
In 2019, he tweeted (now known as Assets may facilitate illegal behavior, including drug dealing and other illegal activities.”
“America has only one true currency, and it’s more powerful, reliable and trustworthy than ever.”
Since then, Trump and his new cryptocurrency company, World Liberty Financial, have undergone a 180-degree U-turn in their confidence in cryptocurrencies such as Bitcoin and Ethereum.
At the Bitcoin 2024 conference in July, Trump took center stage, making bold statements about potential future policies. Trump assured the audience that if he were re-elected as president, he would take steps to prevent the federal government from liquidating its Bitcoin reserves.
Trump said: “If I are elected, it will be the policy of the United States Government to retain 100% of all Bitcoin currently held by the United States Government or acquired in the future.”
He added: “If cryptocurrency is going to define the future, I want it mined, minted and manufactured in the United States.”
Mauves Ledford, CEO of Singaporean tech startup Sogni AI, said the incoming Trump administration may adopt cryptocurrencies to stimulate economic growth.
Ledford, former chief technology officer of CoinMarketCap, told Al Jazeera that “the Trump administration may explore the use of blockchain technology to increase the transparency and efficiency of government operations, especially with Elon Musk serving as an advisor. Also There may be initiatives to promote the adoption of cryptocurrencies to stimulate economic growth and attract technology-driven investments.”
However, Ledford remains cautious about the extent of Trump’s support for cryptocurrencies.
Ledford said, “However, I personally don’t believe anything Trump says. Blockchain does allow for rules to be set that everyone must abide by. I don’t think Trump will particularly like the government he leads.” ”
Trump also took aim at U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler, who is known for his strong criticism of the cryptocurrency industry.
“Day one, I’m going to fire Gary Gensler,” Trump said at a Bitcoin conference in Nashville, Tennessee.
A report released on January 24 by litigation consulting firm Cornerstone Research showed that the U.S. Securities and Exchange Commission will increase its focus on cryptocurrency cases in 2023. The report details 46 enforcement actions last year that resulted in $281 million in settled fines.
“We’re trying to enforce the laws that are in place,” Gensler said during a discussion at New York University School of Law last month. “This is an area that’s rife with fraudsters, scammers, and scams.”
Ledford also admitted that there are many scams in the cryptocurrency industry, which he called “cover-ups.”
Ledford said, “The only ‘coins’ I really trust are Bitcoin and Ethereum. Bitcoin because it created blockchain technology in the first place and is a simple form of digital gold — literally. See, that’s what it means.”
What does this surge mean for the U.S. economy?
The recent surge could open the door to more cryptocurrency investments.
Roderick Melvin Johnson, an investor who has been active in the cryptocurrency space since 2021, said that “narratives drive prices higher. The Biden administration has imposed restrictions on cryptocurrencies. Trump has publicly supported cryptocurrencies and he has been See a world where cryptocurrencies can thrive with government support.”
Johnson, who lives in Clearwater, Florida, shared with Al Jazeera an important post from prominent cryptocurrency analyst Myles Deutscher explaining the significance of a Trump presidency and its likely impact on the U.S. economy .
Ledford, CEO of the Singapore-based technology company, noted that institutional investment in cryptocurrencies has increased significantly, which will drive the industry to mainstream recognition.
He explained, “Major companies are integrating cryptocurrency payments, and advances in blockchain technology are making transactions more secure and efficient. In addition, regulatory frameworks are also constantly evolving, which can provide more stability to the cryptocurrency market. sex and legality.”
What is Bitcoin?
Created in 2009 under the pseudonym Satoshi Nakamoto, Bitcoin is a digital currency traded only online. It uses a technology called blockchain, which allows every Bitcoin transaction to be stored on thousands of computers around the world, known as a “public record,” making it nearly impossible to hack.
Each computer stores every transaction that has ever been made, and these transactions are called nodes. Every node updates its “public record” when a new cryptocurrency transaction occurs anywhere in the world. Due to the decentralized nature of blockchain, no single computer can control the data.
To this day, the creator of Bitcoin remains unknown.
In 2010, the first real-world purchase using Bitcoin was a programmer named Laszlo Hanjec who purchased two pizzas for 10,000 Bitcoins (approximately $41 at the time).
In 2021, the largest Bitcoin transaction was the sale of a luxury mansion in Miami, Florida. The property changed hands for a staggering $22.5 million, all paid for in cryptocurrency.