Markets
Opinion: Bitcoin and Trump soar: Why cryptocurrency’s star is rising with the Republican candidate
Open this photo in the gallery:
A supporter of former U.S. President and Republican presidential candidate Donald Trump waits at Milwaukee Mitchell International Airport in Milwaukee, Wisconsin, on July 14, 2024. PATRICK T. FALLON/Getty Images
Dean Skurka is the President and CEO of WonderFi Technologies Inc.
The past few years have seen many ups and downs in the evolution of digital asset markets. Cryptocurrencies, from their initial introduction as an alternative currency or speculative investment for the “knowledgeable,” have become a viable option.
And it’s not just for young, savvy, or overly adventurous investors. With major publicly traded companies and exchange-traded funds in the space, crypto has become an investment for the general public as well.
And now, who better than Donald Trump to make it even more known to the masses?
Still the frontrunner for the US presidential election despite his rival Joe Biden’s withdrawal from the race, Mr Trump spoke at the Bitcoin 2024 conference in Nashville on Saturday. He presented himself as a friend of the industry: he met with industry executives, 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, coupled with Mr Biden’s lackluster performance in previous debates, has galvanised the Republican Party’s already strong support base. Political analysts have been increasing Trump’s odds of winning the US presidency, and according to Polymarket, the world’s largest prediction market, Trump’s odds stood at 72% on 13 July.
The causes and investments Mr. Trump supports are all the more important. The United States is the heart of global innovation and finance, and what happens there impacts the world. Indeed, bitcoin rose more than 10% in the days following the assassination attempt.
Even Biden’s withdrawal from the presidential campaign couldn’t change the game. Prediction markets still show Trump with a significant lead over presumptive Democratic nominee Kamala Harris, although her current odds are slightly better than Biden’s before his withdrawal. After his withdrawal, the price of Bitcoin has barely budged and Trump’s chances of being elected remain high.
The digital asset industry has already made great strides in legitimacy in recent months, with traditional institutions making significant investments and regulatory agencies beginning to introduce favorable legislation in jurisdictions around the world.
Additionally, leading financial institutions including BlackRock and Fidelity have recently launched Bitcoin ETFs and this week launched Ethereum ETFs in the United States, making the cryptocurrency markets even more accessible to retail and institutional investors. The Bitcoin ETFs launched in January of this year have been among the most successful ETF launches of all time, with aggregate inflows sometimes exceeding $16 billion per week.
Companies that pride themselves on being ahead of their time, including Tesla, MicroStrategy and Block Inc. (formerly Square), have also added significant Bitcoin holdings to their treasuries, endorsing the cryptocurrency as what they see as a viable hedge against traditional asset classes. The entry of these participants has bolstered cryptocurrency’s credibility as a viable investment choice that’s hard to ignore — and now, the U.S. political landscape is making the continued rise of the digital asset sector even more likely.
Analysts and investors are now betting that a Trump-led federal government will mean deeper tax cuts, higher tariffs and fewer regulatory restrictions, potentially reversing recent moves by the U.S. Securities and Exchange Commission to regulate the digital asset industry in what it sees as an authoritarian move.
The announcement this month that Ohio Senator J.D. Vance had been nominated as Mr. Trump’s vice presidential running mate further reinforced those expectations. Mr. Vance is known as a pro-cryptocurrency candidate, having previously introduced a cryptocurrency bill in the Senate and publicly disclosed that he holds more than $100,000 in bitcoin.
Mr. Vance has also criticized the SEC’s approach to blockchain and cryptocurrency legislation. At just 39 years old and with direct experience in the financial and technology sectors, he is not only an interesting interlocutor for Mr. Trump’s apparent lack of technological expertise, but he is also likely to positively influence digital asset policy if elected vice president.
Recent market movements indicate that cryptocurrencies will continue to gain popularity with Trump’s expected presidency. Voters who support mainstream adoption of cryptocurrencies and want less regulation – and what they see as more rationality – within the digital asset industry may support his candidate.
But more importantly for crypto: Trump has repeatedly signaled that the U.S. is crypto-friendly, and his support could be enough to bring more skeptical buyers into the market and put in place an administration that supports long-term growth within the digital asset industry.