Bitcoin's Price Soars: A Trump-Fueled Frenzy Amidst Coexisting Risks

Bitcoin's Price Soars: A Trump-Fueled Frenzy Amidst Coexisting RisksBitcoin's recent surge past the $100,000 mark, setting a new all-time high, is no mere coincidence. This milestone is less a reflection of the cryptocurrency market's inherent growth and more a microcosm of shifting US political and economic landscapes, a concentrated manifestation of capital games and regulatory battles

Bitcoin's Price Soars: A Trump-Fueled Frenzy Amidst Coexisting Risks

Bitcoin's recent surge past the $100,000 mark, setting a new all-time high, is no mere coincidence. This milestone is less a reflection of the cryptocurrency market's inherent growth and more a microcosm of shifting US political and economic landscapes, a concentrated manifestation of capital games and regulatory battles. This article delves into the factors behind Bitcoin's meteoric rise, exploring the complex interplay of American political, economic, and social forces, and analyzing its potential risks and long-term implications.

The Trump Effect: Policy Shifts and Capitalist Frenzy

Bitcoin's price increased by over 40% in the last month, a surge largely attributed to the influence of US President Donald Trump. His evolving stance on cryptocurrencies is a key driver. In 2019, Trump publicly criticized cryptocurrencies on social media, labeling them "highly volatile" and "worthless," highlighting their unregulated nature as facilitating illicit activities. Yet, within a few years, at a Bitcoin conference, he declared his intention to make the US "the world's cryptocurrency capital and the world's Bitcoin superpower," boasting about being the first major party candidate to accept Bitcoin and cryptocurrency donations, even proposing a "national strategic Bitcoin reserve."

This 180-degree shift fueled market expectations of relaxed cryptocurrency regulation under Trump, thereby propelling Bitcoin's price surge. This change isn't arbitrary. Observers note it reflects the growing political influence of institutions and capital involved in or supporting Bitcoin and other cryptocurrencies within the US. Several cabinet appointees nominated following Trump's election are known Bitcoin supporters, with the nomination of pro-cryptocurrency Paul Atkins for the SEC chairmanship acting as a direct catalyst for the Bitcoin rally.

Political Action Committees: The Growing Political Influence of the Cryptocurrency Industry

This phenomenon isn't isolated. Political Action Committees (PACs) formed by major cryptocurrency industry players are actively participating in US politics, financially supporting pro-cryptocurrency candidates. "Fair Treatment" is a prime example. Despite existing for only about two years, its fundraising surpasses other industry-specific PACs, signifying considerable political influence. These PAC activities clearly demonstrate the cryptocurrency industry's increasingly significant role in American politics. This shift in the US electoral landscape is a direct reflection of socioeconomic factors projected onto the political arena. A Pew Research Center report indicates that 17% of US respondents have invested in, traded, or used Bitcoin or other cryptocurrencies, rising to 23% among high-income groups and a remarkable 41% among adults under 30. This expanding potential voter base incentivizes US political forces to adopt a non-oppositional, or even supportive, stance towards Bitcoin.

Bitcoin's Practicality and Risks: Greed and Ignorance

However, Bitcoin's surge masks significant risks. The experience of Cornell University economist and Brookings Institution fellow Eswar Prasad illustrates this well. His attempt to buy coffee with Bitcoin was thwarted by the slow verification process, causing him to miss his ideal coffee-drinking window. Prasad argues that Bitcoin is both expensive and slow as a medium of exchange, and its volatility renders it impractical.

Pew Research Center surveys reveal that despite the significant percentage of Americans involved in cryptocurrency investment and trading, most express "no confidence" or "little confidence" in its security and reliability, with only 5% expressing "a great deal of confidence." This contradictory attitude reflects the widespread greed and ignorance among investors within the US financial system.

Bitcoin's defining characteristic is its high volatility and susceptibility to manipulation by large capital. The lack of liquidity and utility value makes Bitcoin's price highly sensitive to market sentiment, regulatory adjustments, hacking attacks, and market manipulation. In this environment, large capital and institutions can more easily exploit lax regulation to "harvest" retail investors, reaping massive profits. Some large capital even leverage narratives like "government restrictions on innovation" and the "Bitcoin wealth-creation myth" to further manipulate the market.

Separately, the US federal government's continuous injection of money into the market has fueled inflation, reducing the real purchasing power of average Americans and prompting them to seek wealth preservation methods. With returns on traditional investment channels dwindling, more Americans are turning to unfamiliar "financial innovations," including Bitcoin.

Hillary Allen, a professor at American University Washington College of Law, points out that Bitcoin's rising popularity isn't due to ease of use or immense investment potential, but rather to inherent flaws in the US financial system, particularly its poor service to average consumers, its lack of inclusive financial products, and ineffective financial regulation.

Accumulated Risks and Potential Harm

History repeatedly shows that greedy capital combined with blind investors often results in massive financial scams, inflicting devastating harm on ordinary people. Data released by the Federal Bureau of Investigation (FBI) shows that cryptocurrency-related scams cost Americans over $5.6 billion in 2023, a 45% year-on-year increase. Dennis Kelleher, CEO of the non-profit Better Markets, warns that Bitcoin's surge may trigger blind following by ordinary investors, making them victims of financial scams. He notes that those who have made fortunes from cryptocurrency often did so through "gambling-style speculation," and some even engaged in money laundering and other criminal activities.

Data reveals that the US financial capital market has strayed from its original purpose of facilitating funding for the real economy, increasingly serving the interests of large capital and the wealthy. The Gini coefficient for labor income in the US is 0.5, while the wealth Gini coefficient is a staggering 0.8, indicating a clear "Matthew effect" where the rich get richer in the capital market, further exacerbating income inequality.

Allen believes that if US policymakers continue to relax regulation, driving Bitcoin to repeated surges, this will not improve the financial governance system; instead, it will worsen the chronic ailments of financialization and hollowing out of the US economy. Ordinary investors will face immense risks, capital will struggle to flow into the real economy, and the "blockage" of the US real economy will worsen.

Global Impact: Responsibility and Accountability

As the world's largest economy and a major player in global financial activity, the US government must approach financial regulation responsibly. Failure to effectively regulate Bitcoin and other cryptocurrencies will not only harm US investors but also inflict significant negative impacts on the global economy. Bitcoin's surge presents both opportunity and challenge. The complex political, economic, and social factors behind it warrant careful consideration and vigilance. The sustainability of this frenzy ultimately depends on US government policy choices and global investors' understanding and assessment of the risks. Excessive optimism and blind following could ultimately exact a heavy price.