Following a pivotal win in Wisconsin on Wednesday night, Trump surpassed the 270 electoral votes required to clinch the presidency, sending shockwaves through markets.
In the hours leading up to Trump’s declaration of victory, the price of bitcoin had already reached record-breaking levels, rising more than 8 per cent past US$75,000.
Looking ahead, analysts agree that Trump – who had positioned himself as the more crypto-friendly presidential candidate – is poised to usher in a new era for bitcoin.
Speaking to InvestorDaily, Magnet Capital co-founder Egor Sidelska shared the key ways bitcoin is poised to benefit from a Republican victory.
US to become a ‘bitcoin mining powerhouse’
Appearing at the Bitcoin 2024 conference in Nashville earlier this year, Trump announced his intention to sack current Securities and Exchange Commission (SEC) chair Gary Gensler, appoint a crypto presidential advisory council, and maintain a “strategic national bitcoin stockpile” on home soil.
Regarding the latter, the incoming president said he would “never sell” the nation’s more than 200,000 bitcoin amassed from seizing assets through law enforcement action.
According to Sidelska, the government periodically sells down these assets, which consequently has a deflationary impact on prices.
“What Trump has said is that they won’t be selling any more of the bitcoin that they have, so effectively moving it into the state Treasury,” he told InvestorDaily, adding that the move would significantly reduce the selling pressure on the market and could force other nations to take notice.
“So, if you think that the US has a strategic reserve of bitcoin that it, under at least this administration, doesn’t plan to sell, who else has to be a fast follower to that? Who else then needs to start hedging their bets?
“That could be a very nervous position for someone like China, Russia or the UK to make sure that they don’t fall behind.”
Moreover, Trump’s promise to create a crypto advisory council – which would aim to clarify regulatory guidelines and provide policy certainty – is viewed optimistically by the industry, Sidelska added.
“What we don’t understand is, what does crypto regulation actually look like? What is the process for registering as an exchange with the SEC? What assets can you trade or can’t you trade?”
As such, the council could offer the industry a “direct line to the president”, giving bitcoin and its stakeholders a voice in policy making for the first time.
“It means that we get a seat at the table, which we’ve never had, it’s just never been an option before,” he said.
And while Trump’s promise to fire SEC Chairman Gensler had the crowd “erupting” at the bitcoin conference, Sidelska said this may not be such a straightforward task.
Still, he pointed out that the current administration has taken a more cautious and regulatory-heavy approach to crypto, which did not bode well for industry players.
“The head of the SEC holds this unwieldy ability to make people bend at the knee and succumb to our wheel, but not provide any guidance as to how they can actually register in a meaningful, lawful way.
“And historically, with the Biden administration, certainly, it’s been extremely negative towards crypto ... it’s been Gary Gensler, who is fighting back, basically suing or saying that they’re going to sue by issuing Wells notices to every large crypto business in the US. No one’s been spared.”
Certainty drives greater adoption
Sidelska also pointed to a recent study by Bitwise, which found that regulatory uncertainty remains the biggest barrier for wealth advisers when it comes to recommending crypto investments.
“There’s a huge portion of wealth that is sitting there waiting for a wealth advisory to open up and say, ‘Now we have certainty, now we know what’s going to happen at least for the next four years. And we know that because it’s Trump’,” he said.
“That opens up a huge load of real institutional money that can now come into the market.”
He noted that among Trump’s other promises leading up to the election were commitments to establish clear regulatory guidance for cryptocurrency within his first 100 days in office and to support the right to self-custody – steps that could help reduce regulatory uncertainty.
“Trump said within 100 days there’s going to be a crypto regulation paper, transparent guidance for regulating crypto,” Sidelska said.
And given the favourable rhetoric and promises from Trump’s campaign, the co-founder predicts that bitcoin will continue to soar in anticipation of a more crypto-friendly administration.
“We’ll see all-time highs throughout the end of this year, until he gets into office, just because people are expecting that this, any positive sentiment, any rhetoric, is just going to add fuel to the fire.
“Before you had an industry that’s a little bit skittish about engaging with government. Now, you’re going to have something, someone, that’s really proactive,” Sidelska said.
Similarly, Josh Gilbert, market analyst at eToro, agreed that the cryptocurrency is now in price discovery, with the momentum from the election expected to potentially carry bitcoin into six-figure territory within a matter of months.
“Although bitcoin is sitting at record highs, it really feels like this rally could just be getting started. This bull market has a lot of weight behind it, and that could keep driving the asset higher,” Gilbert said.
He added that appetite from institutional investors continues to grow at a time when interest rates are set to fall sharply and risk assets are gaining more traction.
“This record high could also be the driver that brings retail interest back to the ‘euphoria’ levels we’ve seen in previous cycles, that the asset class hasn’t quite experienced this year.”
