Why Bitcoin rose to $100K US after Trump’s election and where is it going now

Donald Trump has put cryptocurrency front and center on his way to the White House, driving the price of bitcoin to record highs and sparking heated debate.

The incoming US president has even signaled that he would create a safe haven for bitcoin.

At the New York Stock Exchange this week, CNBC host Jim Cramer asked Trump if he would move forward with the plan.

“Yes. I think so. We will do something good with crypto,” he answered.

Since Trump won the US election, bitcoin rose above $100,000 US for the first time. Now, he is filling his management with pro-crypto advisors, and seems to support the idea of ​​a bitcoin reserve kept by the US Treasury, which analysts say could increase the price by another 50 percent. Supporters say he could put the US at the forefront of what they see as emerging technologies – while critics say it will reinforce wealth inequality.

Trump’s turn to crypto

Trump has recently turned on the issue of cryptocurrencies, once calling bitcoin a “scam” against the US dollar. But during the campaign, he announced himself as “the first major-party nominee in American history to accept bitcoin and crypto donations.”

It is not clear what made him change his heart. But he and his family launched their own cryptocurrency during a recent campaign.

And he said, that was just the beginning.

“I am laying out my plan to ensure that the United States will be the crypto capital of the planet and a global superpower,” he told a bitcoin conference in November.

He also appointed billionaire David Sacks to be his new “AI and crypto czar”.

Sacks was part of the so-called PayPal Mafia, a group of founders and employees (including fellow Trump appointee Elon Musk) that built the financial technology firm in the early 2000s, and have since founded or played major roles in other technology companies.

He has been a vocal supporter of bitcoin and cryptocurrency since early 2013.

“Bitcoin has the potential to be the next internet – the internet of money. I’m buying,” he posted on X on May 30, 2013, when Bitcoin was trading at just $129. If he invested $1,000 US back then, it would be worth about $800,000 US today.

Now, Sacks has an important job among the next administration, shaping how the industry will be regulated. In July, he sent to X that the biggest desire of this industry was a clear legal framework.

“If Trump wins, the industry will get this, and something new will happen in the US”

Don’t keep a new idea

The concept of a strategic reserve was gaining momentum even before Trump won the election.

A bill proposed this summer by Republican Senator Cynthia Lummis of Wyoming, a Trump ally, would require all bitcoin held by any federal agency to be turned over to the Treasury for holding in a bitcoin vault.

It would also authorize the secretary of the Treasury Department to purchase more than 200,000 bitcoins per year over a five-year period, for a total of $1 million.

The US Treasury will be required to hold onto those bitcoins for at least 20 years.

Crypto enthusiasts say this reserve will position the United States as a global leader in cryptocurrency, which they see as the future of the financial system. They also say that Bitcoin will rise to all new highs if the new management supports the concept of strategic retention.

“I think it is towards R250,000 [US] to $500,000 [US per coin],” said analyst Ronnie Moas, founder of Standpoint Research.

Moas says that the Trump presidency has put new wind in the crypto sails, and when a bitcoin reserve is announced, the price will rise again.

“[It] it will remove the price overnight between 25 and 50 percent because you will have a flood of people coming in trying to jump ahead of the government purchase, which will take months or weeks to go down,” said Moas. this week.

Moas is not a fan of Trump, calling him an “idiot” and a “scam artist,” but he says he is right about bitcoin.

Some maintain that a bitcoin reserve fund is a very bad idea.

Among the critics is Larry Summers, an economist and former US Treasury Secretary.

Summers says there could have been a decent argument in favor of building a fuel storage facility or building a gold stockpile at Fort Knox a century ago.

He says there is no such argument in favor of buying billions of dollars in crypto, as it remains an unsecured and volatile financial asset.

“Some of the claims — this idea that we should have some kind of bitcoin reserve — are crazy,” Summers said on Bloomberg Television’s. Wall Street Week and David Westin.

A well-funded push for a crypto-friendly government

The push for a friendlier administration in Washington is strong and well-funded.

Crypto companies spent more than $133 million supporting crypto candidates in races across the United States in the November election, according to OpenSecrets, which tracks US campaign spending and lobbying. That would make up about one-third of all direct corporate donations to super PACs (political action committees).

And it’s not just the president who won — many Senate and House candidates also won key races. Candidates who sought more crypto restrictions are missing out.

Among them was Mr. Sherrod Brown, the current chairman of the Senate Banking Committee, and a prominent critic.

In what may be his final statement with the committee, Brown warned of the dangers of issues involving algorithmic pricing, AI and of course, crypto.

“All these risks have one thing in common: they are all powerful [to] take more money away from working Americans…

Last year in its first Cryptocurrency Fraud report, the FBI found that American consumers lost more than $5.6 billion last year to crypto-related fraud, an increase of 45 percent from 2022.

Just this week, Reuters reported that Trump’s crypto venture has partnered with a platform that authorities and financial experts say has been used by criminals and the Iran-backed opposition groups Hamas and Hezbollah.

Critics say the power of fraud is all the proof they need that crypto should be kept from the masses. Supporters will say it just underscores the importance of creating what Sacks calls “a clear legal framework within which to operate.”

Either way, Trump’s embrace of crypto has already created new interest, new value and new concerns. And there are five weeks to go before he officially takes office.