Donald Trump, who has evinced renewed interest in the world of crypto through his public statements and, more recently, his campaign promises, has raised the hopes of people supportive of digital currencies. That even led the betting platform Polymarket to place a 65% chance that Donald Trump would mention "crypto" during his recent discussion, reflecting optimism within the community.
Though most had expected this, to the surprise of quite a number, there was little debate around the issue of cryptocurrency. Many were surprised, especially since he remained mum on the issue during the first presidential debate towards the end of June.
Whether Trump's silence is meaningful—was he merely looking to score political points before elections—or whether it holds a clue to whether he is looking away from crypto—is just sticking.
Some in the crypto community are doubtful about Trump's grandiose promises. While a few hope he may truly back the digital currency industry, others—like former D.C. insider Moe Vela—suggest treading carefully. Vela offers that one should be careful not to take Trump's promises "with a grain of salt."
Komodo operates one of its chief officers, the chief technical officer and project lead, Kadan Stadlemann, with a contrasting view to that. According to Stadlemann, if Trump does, the impact on the industry could be huge, especially regarding regulations. The result could be the next big market surge in cryptocurrency.
There seems to have been a shift in the stance of Donald Trump regarding cryptocurrencies. Before the election, he was super sceptical and almost on the offensive about Bitcoin and digital currencies, often labelling them unstable and unregulated.
Given the frequency at which politicians change their opinions because of new trends and voter interests, maybe he does it to get the younger and more tech-savvy voter. Notably, possibly somebody has recently spoken to him about the potential within the crypto market, be it an adviser or business associate. Whether this was heartfelt support or a calculated move, it spells out, very clearly that Trump realises how critical cryptocurrency is going to be for the future of the U.S. economy as well as politics.
If he had taken office as the 47th president of the United States, he would have incited innovation in technology, not stagnation, as the current administration is under the leadership of President Biden. His business bias might include policies that support the advancement of the cryptocurrency industry to attract investments and foster development within the U.S. It can often mean a reduction in regulatory barriers and clearer heads-ups for cryptocurrency businesses.
However, considering that the crypto industry is vulnerable to scams and market manipulations, Trump might add in his policies and actions to prevent fraud and scamming of investors. His administration may also try to establish favourable tax policies for crypto businesses while working with international partners to create a cohesive global regulatory framework. Successful implementation will depend on whether the current administration can manage political opposition and forge a consensus among lawmakers and regulators.
Trump's plan to utilise Bitcoin for the repayment of U.S. debt is based on two assumptions: that the price of Bitcoin will simply continue to rise continuously and that the U.S. will make real, serious spending reductions to dig into its deficit spending. In actuality, the level of debt the U.S. has now undertaken, which recently crossed the $35 trillion mark, is far exceeding the present value of all the Bitcoins in circulation. Even if the government were able to amass a fortune in Bitcoin, unless the price skyrockets, it would hardly affect the overall debt.
While investing in cryptocurrencies sounds cool and all for diversification and adding value over the long term, keeping a national debt under control needs much more attention to TLC: solid fiscal policies, economic growth, and responsible budgeting.
In the short term, Trump's support for crypto may boost optimism in the market, as investors start to expect a more favorable regulatory environment that will encourage broader adoption of digital currencies. That optimism then begets further investment, pushing up prices and activity. However, the reaction of the market will also depend on broader economic conditions, the pace of technological progress, and what other governments do.
In the long run, if Trump's policies end up developing a friendly environment for cryptocurrencies, then this will increase the acceptance and adoption of digital assets in mainstream finance. For example, in the case of further attracting new institutional investors who may feel more comfortable entering under a stable and supportive regulatory framework led by Trump, it could provide a major adoption impulse for decentralised finance applications.
Support for crypto coming from Trump could change the views of a lot of other presidential candidates and lawmakers if his stance differs from a good portion of theirs and enjoys real backing.
In light of the evolvingly important role of cryptocurrencies in the financial sector, it is not surprising that politicians may seize this issue to stay relevant and attractive to the growing base of voters. Yet another key point in Trump's case for support is that with his support, there would be bipartisanship in efforts to ensure that there is, at last, a fully functional framework for regulation supporting crypto innovation. However, the influence of Trump is likely to vary in various circumstances, such as under various political climates and the positions taken by other key political figures.
A Trump presidency can easily trigger the next bull run in the crypto market. Now, to make this a long-term, sustained bull run, Trump's regulatory-friendly environment has to be aligned with increased institutional adoption of blockchain technology and its cryptocurrency offspring.
If, under Trump, the U.S. is taking such pro-cryptocurrency policies, it would make others follow easily, and the more conducive global environment for cryptocurrencies in general would support that. A majority of regulatory uncertainties will be smoothed over by international cooperation, thus increasing market growth. Again, it needs to be borne in mind here that market dynamics are dictated by a host of factors, including economic conditions, geopolitical trends, and regulatory developments around the world.
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