Markets
Opinion: Bitcoin Boom for Trump: Why Crypto Star Rises with Republican Candidate
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A supporter of former U.S. President and Republican presidential candidate Donald Trump waits at Milwaukee Mitchell International Airport in Milwaukee, Wisconsin, July 14, 2024. PATRICK T. FALLON/Getty Images
Dean Skurka is president and chief executive officer of WonderFi Technologies Inc.
The last few years have seen many ups and downs for the evolving digital asset markets. Cryptocurrencies, from their initial introduction as an alternative currency or speculative investment for those “in the know,” have evolved into a viable option.
And it’s not just for young, experienced, or overly adventurous investors. With large publicly traded companies and exchange-traded funds in the space, cryptocurrencies have become a mainstream investment as well.
And now who better than Donald Trump to spread it even further to the masses?
Still the frontrunner for US president despite rival Joe Biden’s withdrawal as the Democratic nominee, Mr Trump spoke at the Bitcoin 2024 conference in Nashville on Saturday. He portrayed himself as a friend of the industry: He met with industry leaders, including bitcoin miners; his campaign is currently accepting cryptocurrency donations; and he reportedly met with Tesla founder Elon Musk to discuss digital asset policy.
The international shock of Mr. Trump’s assassination attempt this month, plus Mr. Biden’s mediocre performance in the previous debate, had galvanized an already strong Republican base of support. Political analysts have been raising Mr. Trump’s chances of winning the U.S. presidency, and according to Polymarket, the world’s largest forecasting market, Mr. Trump’s odds were at 72 percent on July 13.
This makes the causes and investments supported by Mr. Trump all the more important. The United States is the heart of global innovation and finance, and what happens there has repercussions around the world. In fact, Bitcoin rose more than 10 percent in the days following the assassination attempt.
Not even Mr Biden’s exit from the presidential campaign could change that. Prediction markets still show Mr Trump having a significant lead over presumptive Democratic nominee Kamala Harris, although her current odds are marginally better than Mr Biden’s before his withdrawal. Bitcoin’s price has barely budged since his withdrawal, and Mr Trump’s chances of being elected remain even higher.
In recent months, the digital asset sector has already made great strides in gaining legitimacy, with traditional institutions making significant investments and regulatory agencies starting to introduce favorable legislation in jurisdictions around the world.
Additionally, top-tier financial institutions including BlackRock and Fidelity have recently launched Bitcoin ETFs and this week launched Ethereum ETFs in the United States, making cryptocurrency markets even more accessible to retail and institutional investors. The Bitcoin ETFs launched in January this year have been some of the most successful ETF launches ever, with aggregate inflows sometimes exceeding $16 billion per week.
Companies that claim to be ahead of the curve, including Tesla, MicroStrategy, and Block Inc. (formerly Square), have also added significant bitcoin holdings to their corporate treasuries, championing cryptocurrencies as what they see as a viable hedge against traditional asset classes. The entry of such participants has increased crypto’s credibility as a viable and hard-to-ignore investment choice, and now the U.S. political landscape has made the digital asset sector’s continued rise even more likely.
Analysts and investors are now betting that a Trump-led federal government will result in deeper tax cuts, higher tariffs and fewer regulatory restrictions, potentially reversing the U.S. Securities and Exchange Commission’s recent moves to regulate the digital assets sector in what it sees as a weighty issue.
The announcement this month of first-term Ohio Sen. J.D. Vance as Mr. Trump’s vice-presidential running mate has further fueled those expectations. Mr. Vance is known as a pro-crypto candidate, having already introduced cryptocurrency legislation in the Senate and publicly declaring that he holds more than $100,000 in bitcoin.
Mr. Vance has also criticized the SEC’s approach to blockchain and cryptocurrency regulation. At just 39 years old and with hands-on experience in both the financial and tech sectors, he is not only an interesting foil to Mr. Trump’s supposed lack of tech savvy, but is also likely to positively influence digital asset policy if elected vice president.
Recent market movements suggest that cryptocurrencies will continue to gain popularity under an expected Trump presidency. Voters who support cryptocurrency’s move into the mainstream and want less (and what they see as more rational) regulation within the digital asset industry may support his candidacy.
But even more importantly for cryptocurrencies, Mr. Trump has repeatedly signaled a crypto-friendly America, and his endorsement may be enough to attract more skeptical buyers to the market and create an administration that supports long-term growth in the digital asset sector.