The price of Bitcoin and the broader crypto market surged following Donald Trump’s election victory in November, with the rally gaining new momentum in the days leading up to his January 20 inauguration.
Crypto enthusiasts are largely convinced by Trump’s image as an industry messiah, bolstered by his self-proclaimed role as a champion of pro-crypto policies. But are these hopes based on reality, or is the market caught in a fiction?
During his exciting speech in Nashville last July, Trump made bold promises to transform the United States into the crypto capital of the world. To support this vision, he stated his intention to establish a Strategic Bitcoin Reserve (SBR).
“We’re going to do something big with crypto because we don’t want China or anyone else to get ahead of themselves,” Trump told CNBC last month.
Now, as early signs of rising inflation spark fears of an economic crisis, Trump is expected to issue several crypto-related executive orders upon his return to the White House. The new administration has already announced plans to ease regulations, create a presidential crypto advisory council, which will reportedly include around 20 CEOs and founders with close ties to Trump, to give the industry a voice within government, revoke restrictive policies such as SAB 121, and position the United States as a global center for Bitcoin mining.
Crypto Buddies
Trump named venture capitalist and podcast host David Sacks as the nation’s first artificial intelligence and crypto czar.
As part of the weekend’s inauguration celebration, Sacks hosted a crypto ball at the Andrew W. Mellon Auditorium in Washington, DC, on January 17. The event was co-hosted by BTC Inc., Stand With Crypto, Exodus, Anchorage Digital, and Kraken. Sponsors included MicroStrategy, MetaMask, Coinbase, Solana, Galaxy Digital, Kraken and others.
According to the New York Post, the president-elect is reportedly considering an “American first” crypto reserve strategy that would include Bitcoin as well as U.S.-founded digital assets like XRP and Solana.
The question of whether Trump’s coin (TRUMP), now with a market capitalization of around $13 billion, would be included in this reserve.
The Solana-based meme coin currently costs $21, according to CoinGecko data. The coin debuted with 200 million tokens in circulation out of a total supply of 1 billion, with the remaining supply to be gradually released over the next three years.
It reached a high of $73.43 and is currently hovering around $66 at the time of writing.
Based on data from analytics firm Arkham, the US government currently holds nearly $20 billion worth of Bitcoin, seized in various law enforcement actions. This wallet includes 198,109 BTC, valued at approximately $20.63 billion, along with other digital assets such as 54,753 ETH ($189.03 million), 122.13 million USDT ($122.13 million ) and 750,722 WBTC ($77.77 million).
Current government holdings also include Binance Coin (BNB), Aave (AAVE), USD Coin (USDC) and others.
Analyzing the potential impact of these developments on the cryptocurrency market, it is reasonable to expect the market to continue to grow.
The creation of a crypto reserve signals strong government support for Bitcoin as a store of value and strategic asset. Similar to previous institutional adoption events, such a move could increase demand for Bitcoin and reduce market supply. As a result, this could trigger a global domino effect, with more governments adopting similar strategies and driving up demand.
Speaking of specific price targets, Bitcoin price could see a surge similar to previous institutional adoption events, with the potential to reach $120,000 to $150,000 within six to 12 months, depending on sentiment. market and macroeconomic factors.
Prioritizing US-founded assets like XRP and Solana could improve the adoption of these crypto projects globally. XRP and Solana could rebound 30-50% in the short term, depending on the specifics of the strategy. Regarding the decision to launch the TRUMP meme coin just days before the inauguration, this appears to be a strategic move aimed at strengthening Trump’s pro-crypto stance and generating a sense of enthusiasm among his supporters.
An overlooked consequence could be that the government interferes in areas that are traditionally outside its jurisdiction. Although presented as deregulation, top-down crypto policies are inherently regulated, which contrasts with the crypto community’s core values of decentralization.
Furthermore, if deregulation is indeed the goal, how will consumer protection be ensured? Finding that balance is a herculean task. Through my experience leading Outset PR, I’ve seen first-hand how even well-intentioned policies can create friction between innovation and oversight. Moreover, political promises often stagnate or face obstacles before becoming reality. If these initiatives are not executed effectively, the market response could be lukewarm.
Final Thoughts
Crypto market enthusiasts have reason to be excited: the proposed policies could significantly boost adoption and valuation.
Crypto’s biggest stumbling block has long been government, but if alignment between policymakers and the industry can be achieved, the growth potential is very promising.
However, as is always the case in the crypto market, execution and external factors will ultimately determine the scale and sustainability of this growth.
