The “Trump Bump” Gave Bitcoin a Massive Boost. But Will it Last? | Global News Avenue

Donald Trump is known for exacerbating financial market volatility. When he won his first election, markets rallied on expectations of big tax cuts and financial deregulation. Now, his second election victory is boosting certain asset prices, including Cryptocurrency as One of the main beneficiaries.

Last year, the total value of all digital currencies soared from $1.6 trillion to $3.29 trillion, BitcoinA model for the industry, it hit a new high of just over $100,000. By the end of 2023, cryptocurrency prices began to rise again. But the biggest gains came after Trump won the election after campaigning on a promise to be the “crypto president.”

But the “Trump shock” — the surge in crypto asset prices in late 2024 — will soon be put to the test. There are significant doubts that Trump can turn his ambitious campaign promises into reality.

Trump’s ‘Cryptocurrency Presidency’ Promise

Trump announced plans for a “crypto presidency” in 2024 at the annual Bitcoin conference in Nashville, Tennessee. He said he would make the United States “the cryptocurrency capital of the planet and the Bitcoin superpower of the world.” “If Bitcoin is going to the moon… I want the United States to be the country leading the way,” he said.

Trump also discussed establishing a government strategic Bitcoin reserve, similar to the U.S.’s existing gold and oil reserves, and nominated a cryptocurrency advocate to serve as chairman Securities and Exchange Commission (U.S. Securities and Exchange Commission) and the Treasury Department.

Is Trump responsible for Bitcoin rising over $100,000?

In early November 2024, just before Trump won the election, Bitcoin was trading at about $68,300. Soon after, the price surged above $100,000, with analysts citing Trump’s victory as the catalyst. Other cryptocurrencies also surged, as did investments in crypto-related companies.

Trump’s inclusion of crypto-friendly figures at the head of key departments in his administration sends a message that the U.S. government supports Bitcoin, is keen to help it thrive, and has no intention of limiting its growth through regulation. In doing so, he dispelled some of the core concerns that have long plagued investors and steered Bitcoin away from the mainstream.

Is the rise of cryptocurrencies sustainable?

However, it remains to be seen whether Trump will be able to deliver on his more ambitious cryptocurrency-related promises, or even how true those promises are, given that the crypto industry is the largest corporate donor to the 2024 presidential campaign. Just three years ago, he denounced Bitcoin as a “scam against the U.S. dollar,” and that any weakening of the U.S. dollar’s ​​status as the world’s most important trading currency would lead to a weakening of the U.S. economic power. Therefore, America’s long-term strategic interests may win out.

There are concerns over Trump’s pledge to use taxpayer funds to reserve Bitcoin. Bitcoin has no intrinsic value, its price is extremely volatile, and unlike the U.S. dollar, its production and supply cannot be controlled by the U.S. government. While about 95% of Bitcoin’s potential supply has already been issued, it’s still far from mainstream, so convincing Americans to invest in reserves may be difficult.

Nonetheless, Trump himself is now invested in the cryptocurrency industry through the creation of cryptocurrency platform World Liberty Financial, so he may prioritize his own financial interests through cryptocurrency-friendly policies.

What could cause cryptocurrencies to fall?

First, the “Trump Shock” is at least partly a momentum trade, so prices are likely to fall once momentum fades, and indeed, this appears to have already begun, although the pullback has been modest so far.

There are also legitimate concerns about the long-term sustainability of digital currencies. One involves their history of assisting in crime. Another reason is that they are expensive to produce and consume a lot of energy. Many argue that other technologies, including artificial intelligence, are more worthy of our limited energy supplies.

While high-tech, decentralized financial systems have great appeal and potential value, cryptocurrencies have yet to deliver on their promise. Cryptocurrencies have been around for many years, but their practical uses are still very limited, fueling the argument that they are purely speculative instruments and have no intrinsic value.

bottom line

Donald Trump’s electoral ambitions and tendency to prioritize his own business interests have been great for the cryptocurrency industry and its growing investor base. However, there are many reasons to doubt whether the “Trump Rise” is sustainable even in the short term. Campaign promises are cheap. It is impossible to make the United States the “crypto capital of the earth.”