Trump Wins, Bitcoin Hits New High: Is a Trump Trade Era for Crypto Coming?

Trump Wins, Bitcoin Hits New High: Is a Trump Trade Era for Crypto Coming?At 7:25 AM Beijing time on November 12th, Bitcoin broke through its historical high, reaching $89,517 for the first time, a surge of nearly 11.16% for the day

Trump Wins, Bitcoin Hits New High: Is a Trump Trade Era for Crypto Coming?

At 7:25 AM Beijing time on November 12th, Bitcoin broke through its historical high, reaching $89,517 for the first time, a surge of nearly 11.16% for the day. This uptrend is closely related to the surge in Bitcoin's price after Trump's landslide victory in the US election. As of 7 AM today, Bitcoin's price has risen by 28%. Other cryptocurrencies, dubbed the "Trump trade," have also continued to rise, with Ethereum up 34% and Dogecoin up over 32% this week, while the global cryptocurrency market cap has increased by about 7% this week.

Following Trump's victory, the market is generally optimistic about the future of crypto assets, believing they will benefit from favorable policies. Among them, the "Bitcoin Act" is one of the most anticipated policies in the US. This bill, proposed by Wyoming Republican Senator Cynthia Lummis in July 2023, aims to establish Bitcoin as a strategic reserve asset for the United States, with the plan to allow the US government to hold 5% of the total supply of Bitcoin.

Xiao Sa, senior partner at Beijing Dacheng Law Firm, believes that the rise in crypto assets is based on a series of regulatory promises made by Trump during his campaign. These promises include recognizing digital assets as strategic assets for the United States and proposing a reduction in regulation. Xiao Sa points out that Trump had explicitly promised during his campaign to fire Gary Gensler, the former SEC chairman, on his first day in office, who had implemented strict regulations on crypto assets, drawing criticism from the crypto community.

The Trump family itself is involved in the crypto industry. During the campaign, they launched their own token project, WLFI (World Freedom Finance), and attempted to create a DeFi (decentralized finance) platform, with potential future ventures in the stablecoin space.

However, Trump also expressed skepticism about digital currencies during his first term. In 2019, he even stated that he doesnt like Bitcoin and that they are not money. The reason for this change in attitude could be due to his need to win over voters. Xiao Sa believes that Trump needs and is most able to win over voters who are dissatisfied with the current Democratic Party's rule, including a large number of crypto players who are unhappy with frequent law enforcement actions against the crypto industry by regulatory agencies.

Furthermore, with the growing size of the crypto industry and its deep integration with traditional finance, Trump himself may have changed his mind after realizing the economic potential of crypto assets.

In fact, during Biden's presidency, major US digital currency companies like COIN and Ripple faced strict regulation. Gary Gensler, then chairman of the US Securities and Exchange Commission (SEC), believed that most cryptocurrencies should be considered securities and required relevant companies to register under existing regulations. This stance led to legal risks for crypto giants like Coinbase, BN, Kraken, and Robinhood. In 2023, the SEC initiated 46 enforcement actions against cryptocurrencies, a 53% increase compared to 2022. By the end of 2023, the total amount of fines levied against participants in the crypto market was approximately $2.89 billion, with $281 million coming from settlements reached that year.

Trump had explicitly promised during his campaign to fire Gary Gensler, the former SEC chairman, on his first day in office, who had implemented strict regulations on crypto assets, drawing criticism from the crypto community. This promise means that the crypto industry could face a more relaxed regulatory environment in the next four years.

In May this year, Trump explicitly opposed and criticized the Democratic Party's policies towards US cryptocurrencies for the first time when he received crypto-related individuals at his estate. This is seen as a turning point in Trump's attitude towards digital assets. In June, Trump stated on his social media platform, TruthSocial: I hope all the remaining Bitcoin is made in America.

In July, the US Republican Party, for the first time, proposed a number of policies in its draft official platform for the 2024 election that favor cryptocurrencies. These include ending the illegal and un-American crackdown on the US crypto industry, protecting freedom of crypto transactions, opposing the creation of a US version of a central bank digital currency (CBDC), promising to defend Bitcoin mining rights, and allowing cryptocurrency holders to self-custody their tokens. The Trump campaign team stated in the draft that they will "defend the right to conduct transactions free from government surveillance and control."

On July 27th, at the 2024 Bitcoin Conference in Nashville, Tennessee, Trump proposed the idea of strategic Bitcoin reserves and plans to make the United States the cryptocurrency capital.

Xiao Sa believes that there may not be any new progress in US crypto-related policies and regulations in the near future. This is because the Trump administration is currently in a transition period, and its priorities after taking office will be immigration, the economy (especially tariffs), education, and foreign affairs. These were the most important issues in this election.

In the long term, Xiao Sa believes that the frequency of lawsuits and enforcement actions by major regulatory agencies such as the SEC and the US Commodity Futures Trading Commission (CFTC) against the crypto industry may decrease significantly. At the same time, the Trump administration may introduce a series of light regulatory measures that would benefit the crypto industry, and may even introduce legislation that is more lenient than the strict regulatory approach of the European Union.

Xiao Sa also points out that Trump could impose tariffs on trading partners, raise trade barriers, and significantly cut taxes for domestic entities in the US. Under the premise of a friendlier US regulatory stance towards crypto assets, this could attract a large number of crypto industry players to relocate their operations and main business locations to the US.

However, while the market is generally optimistic about the positive impact of Trump's victory on crypto assets, we need to view this trend rationally. Crypto assets themselves are a special asset with significant price volatility and their short-term prices are easily influenced by market sentiment and various factors. Over the next four years, the crypto industry will face many challenges, including regulatory risks, technological risks, and market risks.

Disclaimer: The above content is for reference only and does not constitute any investment advice. Investing involves risks, and you should proceed with caution.