Trump and Bitcoin: How his policies and influence shape the Crypto market
INTRODUCTION:
Bitcoin is a popular cryptocurrency created in 2008 by Satoshi Nakamoto (whose actual identity remains unknown). It is the first decentralised cryptocurrency, based on a free-market ideology. Put simply, when you buy Bitcoin, the transaction is noted in the blockchain, which is a digital ledger that ensures transparency and verification of transactions. Instead of a bank account, you have a digital ‘wallet’ which contains a unique digital key. There will only ever be 21 million Bitcoins in existence as there is a finite supply ; this scarcity makes Bitcoin valuable, similar to gold. Bitcoin can be used as online payment for some things, but it is usually a form of investment. Bitcoin’s price can be volatile as it is influenced by demand, regulations and market speculation. On Monday 25th January 2025, Donald Trump was inaugurated as President for his second term. Despite his recent scepticism of Bitcoin, displayed when he stated that “it seems like a scam”, Trump seems to have finally embraced digital currencies as he vows to make the U.S. the “crypto capital” of the world.
TRUMP’S PRO-CRYTO SHIFT:
Trump’s recent shift towards a pro-crypto stance marks a significant departure from his earlier skepticism, reshaping the global economic landscape. He has endorsed digital assets, attended crypto-focused events, and even introduced his own digital assets – $TRUMP and $MELANIA, which are Meme Coins named after him and his wife, Melania. The coins are now worth $17.62 and $1.59 following rapid crashes after their release. Despite their apparent failure, the introduction of these Meme Coins display an enthusiasm and curiosity from President Trump in relation to the digital market. These initiatives have been interpreted as a move to capitalise on the growing popularity of digital currencies and to align with a younger, tech savvy demographic. Similarly, Trump’s choice of advisers is also noteworthy. For instance, Trump has picked billionaire hedge fund manager, Scott Bessent as his Treasury Secretary. Bessent has spoken favourably about crypto, telling Fox News in July that “crypto is about freedom and the crypto economy is here to stay”, further stating that he thinks “everything is on the table with Bitcoin”. Additionally, Trump’s choice for secretary of commerce, Howard Lutnick, is also a vocal supporter of Bitcoin. Lutnick, the CEO of New York brokerage firm Cantor Fitzgerald, when he was asked at the 2024 Bitcoin Conference whether he owns Bitcoins, he replied “Of course I do”. He also went on to say “Does Cantor Fitzgerald own Bitcoin? A shedload of Bitcoin”. This response highlights that Trump is surrounding himself with people who are not only experienced in working with cryptocurrencies such as Bitcoin, but also who want to develop and exploit the growing digital market.
MARKET REACTIONS:
Following Trump’s re-election, Bitcoin experienced a significant surge in price, surpassing $80,000 for the first time in its existence. On the 20th January, the price of one Bitcoin peaked at $108,163.73. However this surge was short-lived as Bitcoin’s price declined following Trump’s announcement of taxes on imported goods from Canada, Mexico and China. Trump’s announcement triggered a broader market sell-off, with Bitcoin dropping by approximately 4% to around $95,400. As of February 4th, Bitcoin is trading at approximately $98,053, reflecting ongoing volatility driven by both domestic policies and global economic factors. These changes highlight Bitcoin’s growing correlation with macroeconomic events and traditional asset classes. Bitcoin is often recognised as a hedge against inflation and economic instability, its price decline in response to trade policies suggests that investors still treat it as a speculative asset rather than a stable store of value. Similarly, regulatory uncertainty under Trump’s administration has contributed to market unease. Some expected crypto-friendly policies, while others feared potential oversight changes that could impact crypto exchanges. Overall, Bitcoin’s period of price fluctuation following President Trump’s inauguration in January, underscores the fragile balance between optimism, surrounding cryptocurrencies and the real world economic factors that shape market values.
POLICY CHANGES AND PROPOSALS:
Trump has put several proposals into place which are aimed at reshaping the U.S. approach to cryptocurrencies. On January 23, he signed an executive order titled ‘Strengthening American Leadership in Digital Financial Technology’, aiming to position the U.S. as a leader in blockchain technology, digital assets, and other emerging financial technologies. Additionally, Trump ordered the creation of a cryptocurrency working group tasked with proposing new digital asset regulations and exploring the creation of a national cryptocurrency stockpile. This move aligns with his administration’s goal to overhaul U.S. crypto policy and support innovation in digital assets and blockchain technology. Overall, these initiatives represent a significant shift from the previous administration’s cautious approach, signalling a more crypto-friendly environment under Trump’s leadership. Trump has promoted regulatory clarity and supported USD-backed stable coins while rejecting Central Bank Digital Currencies (CBDCs). This means that the U.S. has set a precedent that other countries around the world must try to navigate. Countries with strict crypto regulations, such as China and India, have responded cautiously with some of them reconsidering their stances to remain competitive in an evolving digital marketplace. On the other hand, crypto-friendly nations like Switzerland have embraced Trump’s policies, viewing them as an opportunity to strengthen their own positions in the digital asset market. Additionally, in January 2025 Trump signed an executive order prohibiting federal agencies from developing or promoting a CBDC (Central bank digital currency). This has effectively halted any progress towards a ‘digital dollar’. Trump decided this as the administration expressed concerns that a CBDC could threaten financial stability as well as individual privacy. Geopolitically, as the U.S. has now stepped back, other powerful nations such as China are now advancing their digital currency initiatives. This means nations such as China are beating the U.S. to the punch and are potentially positioning themselves as leaders in the evolving digital currency landscape.
ECONOMIC IMPLICATIONS AND INFLATION CONCERNS:
As previously mentioned, Trump’s recent pro-crypto stance has driven increased investment and has accelerated Bitcoin adoption worldwide, boosting the digital asset market. This surge has contributed to capital inflows into the U.S., with crypto firms and investors optimistic about a deregulated environment. Conversely, Bitcoins’s rapid rise has fuelled fears of a speculative ‘bubble’, with many analysts warning that a sudden market correction could have widespread financial repercussions, particularly for retail investors who entered when prices were at their peak levels. A ‘bubble’ such as this one is when the price of an asset rises significantly above its intrinsic value due to excessive market speculation. This results in a sharp decline in prices when the ‘bubble’ eventually bursts. Moreover, Trump’s embrace of Bitcoin has deepened divisions in Washington. Lawmakers are split on whether crypto deregulation benefits the broader economy or just investors. Additionally, concerns have been raised over the potential use of digital assets in illegal financial activities, which has prompted debates over how the U.S. should balance innovation with regulatory oversight. On the international stage, Trump’s Bitcoin policies have further intensified geopolitical tensions. Nations with strict crypto laws, such as China and Russia, view the U.S’s pro-crypto shift as a challenge to their financial control. As the U.S. moves forward and continues with its cryptocurrency agenda, the tension of economic policy and political strategy will not only shape Bitcoin’s overall trajectory in the future, but also the future of global financial systems.
CONCLUSION:
Donald Trump’s influence on Bitcoin has somewhat changed the cryptocurrency market and while also affecting broader global economics and politics. His pro-crypto stance has fuelled growth of Bitcoin, attracting an increase in institutional and retail investors. However, this shift has also raised concerns about market volatility and potential speculative ‘bubbles’. Politically, Trump’s recent support for Bitcoin has sparked debates in the U.S. and abroad, with some countries optimistic about a potential opportunity to capitalise, while others remain cautious. Trump’s influence on Bitcoin is contributing to global debates about the role of digital currencies in modern economies. This had pushed nations to reconsider their financial systems and regulatory frameworks. As Bitcoin continues to evolve and grow, Trump’s stance on cryptocurrencies is likely to remain a key factor in shaping the future of global finance. This will ultimately offer both opportunities and challenges for countries that are navigating this new digital economical era.
etonomics.com 