Bitcoin hit a record high of $89,000 on Tuesday as investors poured money into cryptocurrencies following the election of Donald Trump as president of the United States, who went from cypto-skeptic to himself an investor.
Bitcoin, the oldest and largest crypto currency, saw its value increase by 30% over the past week. It’s not the only cryptocurrency on the move. Since Trump’s victory, Dogecoin – a currency backed by Trump ally Elon Musk – has surged 152%.
Cryptocurrency is a “digital alternative” to traditional money and operates online without a central authority. But it has also long been very volatile and has faced government restrictions in several parts of the world.
So how is the crypto spike linked to Trump’s election and will the new US administration relax regulatory frameworks around crypto?
What explains the surge in cryptocurrencies since Trump’s victory?
Analysts believe that Trump’s embrace of cryptocurrencies during the presidential campaign and his venture into cryptocurrency trading are attracting investors with hopes that the new administration will be crypto-friendly.
The Trump campaign accepted cryptocurrency donations and he also appeared at industry events, promising to make the United States “the crypto capital of the planet.”
In late September, Trump and his three sons – Donald Jr, Eric and Barron – unveiled their latest entrepreneurial venture, World Liberty Financial. Billed as a decentralized finance (DeFi) money market platform, this new company has introduced a proprietary cryptocurrency dubbed $WLFI.
While the details of the new venture are unclear, many cryptocurrency enthusiasts see it as a sign of support for digital currencies from the new Trump administration.
The company has drawn criticism from some DeFi industry experts over possible conflicts of interest and the fact that the company was launched during the 2024 presidential campaign.
In a recent interview with Newsweek magazine, Michael Dowling, professor of finance at Dublin City University Business School, said: “There has been such a parade of undesirables in the world of crypto and DeFi that adding Trump could not push the list. the needle on popularity or enthusiasm. Keep in mind that these markets, the first crypto markets, started by facilitating drug trafficking.
Are all cryptocurrencies rising?
If a rising tide lifts all boats, Bitcoin’s rise also lifts all cryptocurrencies. Other popular cryptocurrencies like Ethereum and Dogecoin are also on the rise.
Musk, the world’s richest man, a prominent Trump supporter and a known cryptocurrency enthusiast, has been particularly vocal in his support for Dogecoin.
The market share of the main cryptocurrencies is as follows:
- Bitcoin (BTC): 59.46%
- Ethereum (ETH): 12.68%
- Tether (USDT): 5.18%
- BNB (BNB): 3.51%
- Solana (SOL): 3.38%
Dogecoin (DOGE), USD Coin (USDC), Ripple (XRP), 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 capitalization of the cryptocurrency market was around $1 billion.
More than 100 countries allow trading in Bitcoin and other cryptocurrencies, with restrictions, while others ban them outright. The United States, Canada, European Union, Singapore, Australia and New Zealand are countries where trading cryptocurrencies is legal. China, Pakistan, Saudi Arabia, Tunisia and Bolivia have banned cryptocurrency trading.
Over the past four years, Bitcoin has experienced significant volatility, with prices fluctuating widely due to economic events, market sentiment, and changing regulations. In March 2020, the price of Bitcoin fell sharply to below $5,000 as global markets recovered from the COVID-19 pandemic. This rapid decline was followed by a huge rise in November 2021, reaching an all-time high of nearly $69,000.
However, crypto markets would see another downturn due to the collapse of crypto exchange FTX in November 2022. Bitcoin fell sharply below $16,000 and Ethereum fell below $1,100.
What is Trump’s position on Bitcoin?
Trump viewed cryptocurrencies as a threat to the US dollar.
“I am not a fan of Bitcoin and other cryptocurrencies, which are not money and whose value is very volatile and based on emptiness. “Unregulated crypto assets can facilitate illegal behavior, including drug trafficking and other illegal activities,” he posted on Twitter, now named X, in 2019.
“We have only one real currency in the United States, and it is stronger than ever, both reliable and reliable.”
That was then, and Trump, with his new cryptocurrency company World Liberty Financial, has now done a 180-degree turn on his confidence in cryptocurrencies, like Bitcoin and Ethereum.
At the Bitcoin 2024 conference in July, Trump took center stage, making a bold statement regarding potential future policy. Trump assured the public that if he regained the presidency, he would implement measures to prevent the federal government from liquidating its Bitcoin reserves.
“If elected, it will be the policy of my administration, the United States of America, to retain 100% of all Bitcoin that the United States government currently holds or acquires in the future,” Trump said.
“If crypto is going to define the future, I want it to be mined, minted and manufactured in the United States,” he added.
Mauvis Ledford, CEO of Sogni AI, a Singapore-based tech startup, says the incoming Trump administration would likely embrace cryptocurrencies to drive economic growth.
“It is plausible that the Trump administration will consider leveraging blockchain technology to improve the transparency and efficiency of government operations, especially with Elon Musk as an advisor. There could also be initiatives to promote the adoption of cryptocurrencies to drive economic growth and attract technology-driven investments,” Ledford, former CTO of CoinMarketCap, told Al Jazeera.
However, Ledford remains cautious about how far Trump could go in his support of cryptocurrencies.
“I personally don’t believe what Trump is saying, and blockchains allow for the creation of rules that everyone has to follow, which I don’t think Trump would particularly like in the government he leads,” Ledford said .
Trump also aimed his gun at US Securities and Exchange Commission (SEC) Chairman Gary Gensler, who is known to be highly critical of the cryptocurrency industry.
“On day one, I will fire Gary Gensler,” Trump said at the Bitcoin conference in Nashville, Tennessee.
The SEC’s focus on crypto cases has intensified in 2023, as revealed in a January 24 report from Cornerstone Research, a litigation consultancy. The report details 46 enforcement actions last year, resulting in $281 million in monetary penalties for settlements.
“We try to enforce the laws in force. … It’s an area with a lot of fraudsters, a lot of scammers, a lot of scams,” Gensler said last month in a discussion at New York University Law School.
Ledford also acknowledges the numerous scams, which he calls “smoke and mirrors,” that have plagued parts of the cryptocurrency industry.
“The only “tokens” I really trust are Bitcoin and Ethereum. Bitcoin because it was the first creator of blockchain technology and a simple form of digital gold – literally everything it was intended to be,” Ledford said.
What does this increase mean for the American economy?
The recent surge could open the door to more investments in cryptocurrencies.
“The story determines the price. The Biden administration has put the brakes on crypto. Trump, who has publicly supported it, is seen as a world where crypto can thrive with government support. Bullish,” said Roderick Melvin Johnson, an active crypto investor since 2021.
Johnson, based in Clearwater, Florida, shared with Al Jazeera an important X-thread from Miles Deutscher, a prominent crypto analyst, explaining the importance of the Trump presidency and its possible effect on the US economy.
This is the most obvious bullish pattern a liquid market has seen in YEARS.
This is not an exaggeration.
I have the data to show you how the stars are aligning for the biggest crypto bull run EVER.
🧵: The only 10 important factors you need to know.👇
– Miles Deutscher (@milesdeutscher) November 11, 2024
Ledford, the Singapore-based tech CEO, notes that there has been a notable increase in institutional investment in cryptocurrencies, which should see the industry gain mainstream acceptance.
“Large businesses are integrating crypto payments and advances in blockchain technology are making transactions safer and more efficient. Additionally, regulatory frameworks are evolving, which could bring more stability and legitimacy to the crypto market,” he explained.
What is Bitcoin?
Created in 2009 under the pseudonym Satoshi Nakamoto, Bitcoin is a digital currency that is traded exclusively online. Using a technology called blockchain, it allows every Bitcoin transaction to be stored on thousands of computers around the world, known as the “public record”, making it virtually impossible to hack.
Every computer has stored every transaction ever made, something called a node. When a new cryptocurrency transaction takes place anywhere in the world, each node has its “public record” updated. Due to the decentralized nature of blockchain, no computer controls the data.
To date, the creator of Bitcoin is unknown.
In 2010, the first real purchase using Bitcoin consisted of two pizzas purchased for 10,000 Bitcoins, or about $41 at the time, by a programmer named Laszlo Hanyecz.
In 2021, the largest Bitcoin transaction was the sale of a luxurious mansion in Miami, Florida. The property changed hands for a whopping $22.5 million, paid entirely in cryptocurrency.
