In the days since Donald Trump became president-elect, markets have been breaking records. Cryptocurrency stalwart Bitcoin is on a tear. But how did Trump go from saying, “It seems like a scam,” to being a catalyst for huge growth?
When it comes to markets, the Dow Jones Industrial Average is up roughly 6%, while the S&P 500 is up around 5%. Neither compares to the 16% surge by Bitcoin, which has the cryptocurrency hitting record highs and eclipsing $85,000.
“One of the most important things is we have the first Bitcoin president,” Anthony Pompliano, the CEO and founder of Professional Capital Management told CNBC the morning after the election. “President Trump ran on a campaign point that he was going to protect Bitcoin.”
While Trump may have been cold on Bitcoin back in 2021, this summer he went into the lion’s den to make the case that he would be a Bitcoin president.
“I’m laying out my plan to ensure that the United States will be the crypto capital of the planet and the Bitcoin superpower of the world,” Trump said while addressing Bitcoin2024 in July. “I will get it done.”
But for the president-elect, it’s been about more than just impassioned speeches in front of cryptocurrency fans. In the past several months, the president-elect surrounded himself with high-profile crypto supporters like Robert F. Kennedy Jr., Elon Musk and Vivek Ramaswamy, whose company, Strive Wealth Management, recently announced it would start “thoughtfully integrating” Bitcoin into client portfolios.
As any industry would, cryptocurrency is surging on the prospect of fewer roadblocks and regulations preventing widespread adoption.
“On day one, I will fire Gary Gensler and hire a new SEC chairman,” Trump said in July. “I will appoint a new SEC chairman who believes America should build the future, not block the future, which is what they’re doing.”
Gary Gensler’s perceived “war” on crypto is effectively over. As head of the SEC, Gensler has attempted to bring cryptocurrency under the same regulatory scrutiny as other securities.
And while crypto has seen more mainstream adoption in the past few years, like being able to trade Bitcoin ETFs, critics say that’s no thanks to the Biden administration.
“It wasn’t that the Biden administration said, ‘Hey, let’s do an ETF,’” former Commodity Futures Trading Commission Chair J. Christopher Giancarlo told Straight Arrow News in July. “They were forced into it by court action that ruled that their refusal to grant the ETF was arbitrary and capricious. And even the chairman of the SEC admitted they were forced into it. So it wasn’t that they were putting their front foot forward. They were actually putting their front foot backward until the courts ruled against them.
“I don’t think crypto was political until this administration [took] a very repressive, suppressive approach, both in terms of regulation by enforcement, by what people call Operation Chokepoint 2.0, by restricting banking services to this industry,” he continued. “I think that’s what created a political opening. Politics abhors a vacuum. If one party is going to create an opening, the other party is going to seize it.”
Republicans have done just that. Trump said his administration will, “Keep 100% of all the Bitcoin the U.S. Government currently holds or acquires into the future.”
The U.S. government already holds more than 200,000 Bitcoin, mostly seized from cyber criminals and the dark web. That’s about $17 billion when Bitcoin’s trading at $85,000. The government has auctioned off some of its seized Bitcoin. But a report from Forbes in January said the U.S. government holds more tokens than any other nation.
It’s not just the friendlier stance that’s giving investors hope. Noelle Acheson, who writes the newsletter “Crypto is Macro Now,” pointed to some market fundamentals behind the surge.
“The likelihood of a pickup in inflation just got even higher – tax cuts, the deportation of immigrants, and tariffs are all likely to push up spending, wages and the price of basic goods. Leaving the political impact of that aside for a second (it could be harsh), it adds to the tailwinds propelling crypto and gold,” she wrote on November 9.
Crypto has long been seen as an inflation hedge, especially considering its reputation as an alternative to the U.S. dollar.
