Bitcoin’s ascent from $103,259 to $133,000 marks an important moment for the crypto-world, as it coincides with Donald Trump being elected president.
This landmark, which represents a nearly 50% increase since November 1, is an indicator of wider shifts that are expected under the administration, which many refer to as being the first crypto-friendly in US history.
Trump’s support of digital assets has already fueled optimism in the crypto industry.
He has pledged to end restrictive regulations, create a strategic Bitcoin reserve, and promote crypto-advocates into influential positions.
The cautious approach of the previous administrations is gone, and a new age of crypto adoption and innovation can now begin.
Bitcoin surpasses the $100,000 barrier
Bitcoin’s rise above $100,000 is more than a symbol of success. It also demonstrates the increasing influence that crypto has in global finance.
Bitcoin, alone, is worth over $2 trillion.
The potential of digital assets for investment is evident in this remarkable growth.
Andy Serwer (Editor at Large, Barron’s) compared the current shift with a “crypto winter” and compared it to previous downturns such as the crypto summers of 2022-2023.
Serwer says, “The consequences of under-recognition are so vast and impactful on my mind that it is quite a shock.” Serwer adds:
It is not just for those who invest in crypto-exchange traded funds and digital currencies. This also applies to traditional investors, as they may notice that money has been flowing away from traditional assets and wonder if it’s worth taking a chance on digital assets.
Crypto’s Golden Ticket: Regulatory reform
Trumps biggest move was to replace Gary Gensler, the SEC chairperson with Paul Atkins. Atkins is a crypto-friendly.
The shift in focus is anticipated to result in a reduction of regulatory oversight and a favorable environment for cryptocurrency innovation.
One of the boldest proposals from the Trump administration is to eliminate capital gains tax on cryptocurrencies registered in the US.
This policy, if implemented, could redirect substantial investments from traditional assets into digital ones, further stimulating the growth of this sector.
These changes have not been without critics.
Charles Munger and other prominent investors, such as those who are skeptical of cryptocurrencies, have warned against excessive exuberance. They compare cryptocurrencies with “rat poison”, which can lead to catastrophic losses.
From the Dollar to Gold: The ripple effect
Trump’s crypto policy could have far reaching implications for the US Dollar, Treasury Bonds, and even Gold.
Trump’s proposal for a Bitcoin strategic reserve aligns him with Senator Cynthia Lummis who supports the use of Bitcoin as a way to increase the status of the US dollar and lower the national debt.
Bitcoin’s rise is also a threat to traditional safe-havens such as gold.
Bitcoin has surpassed the value of one kilogram of gold for the first time. This is causing a shift in investments.
The data shows that cumulative flows into Bitcoin ETFs are outpacing gold ETFs, a trend which could increase as cryptocurrency gains acceptance in the mainstream.
Accelerating adoption by institutions
The major financial institutions are preparing for the crypto-friendly future.
JP Morgan reported that Bitcoin and Ether funds have attracted record amounts of assets, totaling $161 billion.
BlackRock, Fidelity and other traditional finance companies are increasing their cryptocurrency offerings. Robinhood Markets has seen a rise in the volume of crypto trades.
Crypto options are also expanding rapidly.
Robinhood Markets reported that the notional volume of crypto trading in November exceeded $30 billion, a 400% increase compared with October.
Vlad Tenev CEO of Robinhood highlighted the potential for crypto to revolutionize conventional finance.
Vlad Tenev, CEO of Robinhood told Barron’s that “it’s very early on the technology adoption curve for crypto.”
Crypto will be the foundation of many financial assets people invest in today. Costs are reduced, and customer service is improved dramatically.
Trump stakes in Crypto
Trump’s shift to cryptocurrency advocacy has personal implications.
Bloomberg reports that the president-elect has at least one million dollars in Ether and is still selling NFT trading cards.
Trump Media & Technology Group has also developed a cryptocurrency payment service called TruthFi. This further strengthens its ties with the digital assets space.
The proposed cabinet reflects his strong affinity for crypto, as Vice President elect JD Vance (and Commerce Secretary nominee Howard Lutnick) are among the people with substantial crypto investments.
Cantor Fitzgerald (Lutnick’s company) holds Tether Treasury Bonds worth $130 billion, demonstrating the deep integration of the government with the cryptocurrency ecosystem.
The WSJ reported previously that Tether is being investigated over possible sanctions violations and money laundering rules.
Trump’s policies that favor crypto could have a global impact on trade, economic relations and the financial industry.
The proposed tariffs on imported goods could encourage countries to consider cryptocurrency as a viable alternative to dollars, which would accelerate crypto adoption globally.
John Hardy, a Saxo Bank analyst, suggests that such a scenario would quadruple crypto markets and fundamentally change the financial landscape.
What are the risks of crypto-euphoria?
Although the optimism in the air is tangible, there are still risks.
Investors could suffer significant losses due to the volatile nature of cryptocurrency, especially as speculation builds.
The current market rally could be a repeat of past bubbles with disastrous consequences for investors who are not prepared.
Proponents of the industry argue, however, that technological advances and increasing adoption are a solid foundation for growth over time.
The cryptocurrency market is poised for transformation as Trump gets ready to assume office.
Crypto is poised for unprecedented growth thanks to the convergence of institutional adoption, supportive policies and technological innovation.
As with any major financial change, there will be challenges.
Both investors and policymakers must tread carefully and with foresight in this brave, new world.
What else is in store for cryptocurrency under Trump, with Bitcoin surpassing $100,000? This post may change as new information becomes available
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