Why does Trump’s election as US President cause Bitcoin to rise? | Donald Trump news

Bitcoin rose to a record high of $89,000 on Tuesday as investors pumped money into cryptocurrencies following the election of Donald Trump as president of the United States, who has transformed himself from a crypto-skeptic to an investor.

Bitcoin, the oldest and largest cryptocurrency, has risen 30 percent in value in the past week. It's not the only cryptocurrency in transition. Since Trump's victory, Dogecoin – a currency backed by Trump ally Elon Musk – has risen 152 percent.

Cryptocurrency is a “digital alternative” to traditional money and works online without a central authority. But it has also long been highly volatile and has faced government restrictions in several parts of the world.

So how does the rise in cryptocurrencies relate to the election of Trump and will the new US administration loosen the regulatory framework for cryptocurrencies?

What explains the crypto surge since Trump's election victory?

Analysts believe Trump's embrace of cryptocurrencies during the presidential campaign and his foray into crypto trading are luring investors in the expectation that the new administration would be crypto-friendly.

The Trump campaign accepted cryptocurrency donations and he also appeared at industry events, promising to make the US the “crypto capital of the planet.”

In late September, Trump and his three sons – Donald Jr., Eric and Barron – unveiled his latest business venture: World Liberty Financial. This new company, touted as a decentralized finance (DeFi) money market platform, introduced a proprietary cryptocurrency called $WLFI.

Although details of the new venture are unclear, many cryptocurrency advocates see it as a sign of the new Trump administration's support for digital currencies.

The company has been criticized by some experts in the DeFi sector due to possible conflicts of interest and the fact that the company was founded during the 2024 presidential campaign.

In a recent interview with Newsweek magazine, Michael Dowling, Professor of Finance at Dublin City University Business School, explained: “There has been such a parade of undesirables in the crypto and DeFi world that adding Trump to the list is impossible could push the needle for popularity or enthusiasm. Remember, these markets, the original crypto markets, had their origins in facilitating drug trafficking.”

Are all cryptocurrencies rising?

If a rising tide lifts all boats, a rising Bitcoin also raises all cryptocurrencies. Other popular cryptocurrencies such as Ethereum and Dogecoin are also increasing.

Musk, the world's richest man, a prominent Trump supporter and well-known cryptocurrency enthusiast, has been particularly vocal about his support for Dogecoin.

The market share of the top cryptocurrencies is as follows:

• Bitcoin (BTC): 59.46%
• Ethereum (ETH): 12.68%
• Tether (USDT): 5.18%
• BNB (BNB): 3.51%
• Solana (SOL): 3.38%

Dogecoin (DOGE), USD Coin (USDC), Ripple (XRP) and TRON (TRX) are other popular cryptocurrencies.

According to CoinMarketCap, a website that provides data on thousands of cryptocurrencies, the cryptocurrency's global value is $2.79 trillion. In 2013, the total capitalization of the crypto market was about $1 billion.

More than 100 countries allow trading Bitcoin and other cryptocurrencies with restrictions, while other countries have outright bans. The USA, Canada, European Union, Singapore, Australia and New Zealand are some countries where cryptocurrency trading is legal. China, Pakistan, Saudi Arabia, Tunisia and Bolivia have made cryptocurrency trading illegal.

Over the past four years, Bitcoin has experienced significant volatility, with prices fluctuating dramatically due to economic events, market sentiment and regulatory developments. In March 2020, the price of Bitcoin fell sharply to below $5,000 as global markets suffered from the COVID-19 pandemic. This rapid decline was followed by a huge surge in November 2021, reaching an all-time high of almost $69,000.

However, the crypto markets would witness another downturn due to the collapse of crypto exchange FTX in November 2022. Bitcoin fell sharply to below $16,000 and Ethereum fell below $1,100.

What is Trump's stance on Bitcoin?

Trump used to see cryptocurrencies as a threat to the US dollar.

“I am not a fan of Bitcoin and other cryptocurrencies that are not money and whose value is very volatile and based on air. “Unregulated crypto assets can facilitate unlawful behavior, including drug trafficking and other illegal activities,” he wrote in 2019 on Twitter, which has since been named X.

“We have only one real currency in the United States, and it is stronger than ever, both reliable and reliable.”

That was then, and Trump has now made a 180-degree turn in his trust in cryptocurrencies like Bitcoin and Ethereum with his newly founded cryptocurrency company World Liberty Financial.

At the Bitcoin 2024 conference in July, Trump took center stage and made a bold statement about possible future policy. Trump assured the audience that if he regains the presidency, he will take action to prevent the federal government from liquidating its Bitcoin reserves.

“If elected, it will be the policy of my government, the United States of America, to retain 100 percent of all Bitcoin that the U.S. government currently owns or acquires,” Trump said.

“If crypto is to define the future, I want it to be mined, minted and manufactured in the USA,” he added.

Mauvis Ledford, CEO of Sogni AI, a Singapore-based technology startup, says the new Trump administration would likely adopt cryptocurrencies to boost economic growth.

“It is plausible that the Trump administration could consider using blockchain technology to improve transparency and efficiency in government operations, particularly with Elon Musk as an advisor.” There could also be initiatives aimed at encouraging the adoption of “To promote cryptocurrencies to stimulate economic growth and attract technology-driven investments,” Ledford, a former CTO of CoinMarketCap, told Al Jazeera.

However, Ledford remains cautious about how far Trump might go in his support for cryptocurrencies.

“However, I personally don’t believe anything Trump says, and blockchains allow for the creation of rules that everyone has to follow, which I don’t think Trump would particularly like in a government he leads,” Ledford said.

Trump has also trained his guns on US Securities and Exchange Commission (SEC) Chairman Gary Gensler, who is known to be highly critical of the cryptocurrency industry.

“On day one I will fire Gary Gensler,” Trump said at the Bitcoin conference in Nashville, Tennessee.

The SEC's focus on crypto cases has increased in 2023, according to a Jan. 24 report from Cornerstone Research, a litigation consulting firm. The report details 46 enforcement actions last year that resulted in $281 million in settlement fines.

“We try to enforce current laws. … This is an area with a lot of scammers, a lot of crooks, a lot of scams,” Gensler said last month during a discussion at New York University School of Law.

Ledford also acknowledges the many scams he describes as “smoke and mirrors” that have plagued parts of the cryptocurrency industry.

“The only 'tokens' I really trust are Bitcoin and Ethereum. Bitcoin because it was the first creator of blockchain technology and a simple form of digital gold – literally everything it was supposed to be,” Ledford said.

What does the increase mean for the US economy?

The recent surge could open the door for more cryptocurrency investments.

“Narrative determines the price. The Biden administration has a stranglehold on cryptocurrencies. Trump, who has publicly supported it, is seen as a world where crypto can thrive with government support. Bullish,” said Roderick Melvin Johnson, an active crypto investor since 2021.

Johnson, who is based in Clearwater, Florida, shared with Al Jazeera an important X-thread from Miles Deutscher, a prominent crypto analyst, in which he explained the significance of the Trump presidency and its potential impact on the US economy .

This is the most obvious uptrend a liquid market has had in YEARS.

That's not an exaggeration.

I have the data to show you how the stars align for the biggest crypto bull market ever.

🧵: The only 10 important factors you need to know.👇

— Miles Deutscher (@milesdeutscher) November 11, 2024

Ledford, the Singapore-based technology CEO, notes that there has been a significant increase in institutional investment in cryptocurrencies, which should propel the industry into widespread adoption.

“Large companies are integrating crypto payments and advances in blockchain technology are making transactions more secure and efficient.” Additionally, regulatory frameworks are evolving that could bring more stability and legitimacy to the crypto market,” he explained.

What is Bitcoin?

Founded in 2009 under the pseudonym Satoshi Nakamoto, Bitcoin is a digital currency that is traded exclusively online. Using a technology called blockchain, every Bitcoin transaction can be stored on thousands of computers worldwide, known as a “public record,” making hacking virtually impossible.

Every computer has stored every transaction ever made, which is called a node. When a new cryptocurrency transaction occurs anywhere in the world, every node’s “public records” are updated. Due to the decentralized nature of blockchain, no computer controls the data.

To this day, the inventor of Bitcoin is unknown.

In 2010, the first real-world purchase using Bitcoin was two pizzas that a programmer named Laszlo Hanyecz bought for 10,000 Bitcoins, about $41 at the time.

In 2021, Bitcoin's largest transaction was the sale of a luxurious villa in Miami, Florida. The property changed hands for a staggering $22.5 million, paid entirely in cryptocurrency.