Bitcoin prices soared to over $109,000 early Monday, just hours before President-elect Donald Trump’s inauguration, as the cryptocurrency market anticipates significant action from the incoming administration. Once a skeptic, Trump has now embraced digital currencies with renewed enthusiasm, launching a cryptocurrency venture and vowing to establish the U.S. as the “crypto capital” of the world.
Trump, who previously referred to Bitcoin as a “scam,” has reversed his stance and taken a proactive approach to the digital asset space. During his campaign, he promised to create a U.S. cryptocurrency reserve, implement industry-friendly regulations, and even appoint a “crypto czar” to spearhead the administration’s efforts in the crypto sector.
“You’re going to be very happy with me,” Trump told cryptocurrency supporters at a Bitcoin conference last summer, generating excitement in the industry.
Bitcoin, the world’s most popular cryptocurrency, was created in 2009 as a decentralized form of digital cash, free from the control of banks and governments. Over the years, Bitcoin and other cryptocurrencies have fluctuated wildly, transitioning from niche assets to mainstream investments amid both high volatility and frequent criticisms. Detractors point to the use of digital currencies by criminals, scammers, and rogue nations, labeling them as little more than Ponzi schemes.
However, Bitcoin has defied these critics, surviving multiple price crashes and regaining value as wealthy crypto investors poured funds into the political campaigns of Trump, who was seen as more favorable to the sector than his opponent. Bitcoin’s price has surged since Trump’s election victory, briefly topping $100,000 last month before a brief dip to around $90,000. On Friday, the price jumped 5%, and on Monday, it spiked by more than $9,000, according to CoinDesk. Just two years ago, Bitcoin was priced around $20,000.
Trump’s cabinet appointments, which include key figures supportive of cryptocurrencies, further fueled optimism. These appointments include individuals set to lead the Treasury, Commerce, and Securities and Exchange Commission (SEC) departments, all of whom are perceived as crypto allies.
In celebration of Trump’s rise to power, key figures in the crypto industry held a sold-out “Crypto Ball” on Friday, with tickets selling for thousands of dollars.
Key Policy Proposals from the Trump Administration
Trump’s early days in office are expected to see several significant actions related to cryptocurrencies, including:
Crypto Council: As a candidate, Trump pledged to establish a special advisory council within the first 100 days of his presidency to develop clear and favorable regulations for the cryptocurrency industry. While the details remain unclear, Trump has already named tech executive David Sacks as the administration’s “crypto czar” and former congressional candidate Bo Hines as the executive director of the “Presidential Council of Advisers for Digital Assets.”
Trump’s vision for crypto-friendly regulation aims to reassure the industry that future policies will be crafted by individuals who support, rather than oppose, the sector. His pick for SEC chairman, Paul Atkins, has been a vocal advocate for digital currencies, and crypto industry leaders are hoping for a shift away from what they perceive as a hostile regulatory environment under the Biden administration.
Peter Van Valkenburgh, executive director of Coin Center, a cryptocurrency advocacy group, emphasized the likely change in tone at the SEC under Trump’s leadership, especially after the departure of outgoing chairman Gary Gensler, who has been critical of the crypto market.
Strategic Bitcoin Reserve: Another bold promise Trump made was to create a U.S. government “strategic bitcoin reserve” similar to the country’s gold reserves. At a bitcoin conference earlier in the year, Trump suggested that the U.S. government would keep the billions of dollars’ worth of bitcoin seized in law enforcement actions, rather than auctioning it off.
A draft executive order, circulating among crypto advocates, proposes that the Treasury Department establish a “Strategic Bitcoin Reserve,” eventually holding at least $21 billion in Bitcoin as a “permanent national asset” managed through the Exchange Stabilization Fund. This proposal aligns with legislation introduced by Republican Senator Cynthia Lummis, calling for a national crypto reserve to help diversify U.S. holdings and mitigate financial risks.
Critics argue that Bitcoin’s notorious volatility makes it an unsuitable reserve asset, but supporters contend that such a move would mark a crucial step in legitimizing Bitcoin in the eyes of the public.
Zack Shapiro, head of policy at the Bitcoin Policy Institute, highlighted the potential significance of a government-backed bitcoin reserve in solidifying Bitcoin’s status as a mainstream asset.
As the market reacts to Trump’s forthcoming presidency, the cryptocurrency industry anticipates a wave of pro-business policies and regulatory changes that could redefine the role of digital currencies in the global financial system.
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