Given the outcome of the recent 2024 US presidential election which went to Donald Trump, the Crypto world is already abuzz. As the world tries to decipher what a Trump presidency means to them, investors, institutions and crypto enthusiasts can not overlook the issue of regulation, institutional acceptance and outlook on the markets.
What does that translate to the crypto market?
- Regulatory Environment: Privatisation and Shift towards Innovation
Trump has always been a votary of deregulation and many believe that this line will also extend to the crypto market. Rhetorically, Trump in his first term was a skeptic of crypto yet he used powerful language such as ‘economic liberty.’ This win may indicate a new world on regulations that encourages innovation as against stiff regulation.
– Fewer Restrictions, Greater Innovation: This is specially a good thing for blockchain companies and projects because of Trump loyalty to deregulatory move. The local regulatory bodies such as the SEC may thus move to the back seat like other global regulatory bodies and allow the US based crypto firms to experiment.
– Pushback Against Central Bank Digital Currencies (CBDCs): A Trump administration might slow down or downplay the idea of a US digital dollar, considering CBDCs as instruments for governmental regulation of such freedom. This may support the storytelling for digital assets that originated from decentralized cryptocurrencies like Bitcoin, and certainly, give Bitcoin, and other cryptos a use case as ‘freedom currency.’
- Encouraging Institutional Investment and Adoption
Lenders, other traditional financial institutions can feel more comfortable to experiment and invest in crypto-assets in its case with Trump’s win. His administration with its concern to economic growth and American technology superiority might result in the extended support of blockchain as the source of competitive advantage.
– Increased Wall Street Involvement: This is because such institutions may enable the usage of cryptocurrencies comprehensively, responding to the Trump administration as an element preventing the formation of strict standards. It could lead more money into the market, price steadiness and ultimately increase market acceptance of the digital currency.
– Incentivizing US Blockchain Development: Trump has rather focused of leadership in technology for America. It has been found that the administration may increase incentives for block chain research, innovation and development as the technology in crypto is rapidly growing thus making the U.S to be a global of this crypto.
- Strengthening the Dollar and Crypto as a Hedge
While Trump’s policies tend to focus on a strong dollar, this aspect of crypto should be affected if not at all helpful in the first place.
– Challenges for Bitcoin as a ‘Store of Value’: If Trump’s administration succeeds in managing the dollar upward, Bitcoin and all other cryptos could face competition for the place of digital currency of choice. Bitcoin’s utility as an asset to invest in as a hedge against the depreciation of the US dollar might not be as relevant to investors going forward.
– Market Volatility and Increased Demand: Meanwhile any volatility triggered by Trump’s policies in trade or foreign relations could increase demand for crypto as an instrument of risk mitigation. In this case, crypto could still stay the investment that is sought by people most of the time as a safe heaven.
- Energy Policies and Crypto Mining
The Trump administration is likely to promote fossil sources such as oil and gas, and this can directly affect the high-energy demanding crypto mining industry.
– Lower Energy Costs, More Mining: Lower energy prices may bring in more mining operations to the US and cement the nation’s place among the leading Bitcoin miners. This could also increase decentralization and security of the Bitcoin network particularly in case investors or even US based miners extend their operations.
– Environmental Concerns: As much as Trump is promoting traditional energy, this will raise questions on the ecological consequences of cryptocurrency mining. This could pose a PR issue to the industry on one hand but on the other hand could compel miners to seek ways in which they can achieve the objectives of sustainable mining while pursuing the quest for larger market share.
- Market Sentiment and Volatility
Trump and his words have a heavy impact on markets because his opinions and actions always cause fluctuations. Depending on his new term, crypto traders could be faced with a new wave of high volatility and generous volatility metrics again.
– Increased Volatility in Crypto Markets: Such consequences are expected, as Trump himself, as well as his team, has been known for introducing certain unpredictability into crypto markets. When his administration had policy changes or made statements regarding an asset it could easily move the market in a way that might be beneficial for traders but not necessarily investment-grade for more long term investors.
- Political Tokens and NFTs: Additional due to Trump’s presidency, there may be an increase in politics-themed tokens or additional NFTs, which will provide both speculative advantages and possibilities. These assets could garnish short-term focus but might have brought in the volatility factor also.
Crypto: A new chapter starts.
With Trump now set to lead the US for the next four years the crypto market is on the cusp of potentially significant change. While one can argue whether a new administration will be bullish or bearish for crypto or not still it can be said without doubt that this will be the age of change in the digital currency saga.
The Crypto traders and enthusiasts should brace themselves for an active ride in the future from Trump’s policies for crypto regulation and economy in America and other parts of the World.
Disclaimer
Views expressed above are the author’s own.
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