Big win for Bitcoin

Bitcoin has rallied in light of the recent US presidential election, with the cryptocurrency community celebrating the Trump Victory.

This was explained by Carel de Jager, research lead for Blockchain technology at the CSIR, on The Money Show with Stephen Grootes. 

After Trump’s victory in the US elections, Bitcoin shot up to record highs, with its price reaching a price of over R1.32 million on 6 November.

“Both presidential candidates actually expressed support for crypto and Bitcoin during their campaigns, but Trump was way more aggressive with his messages,” de Jager said.

“He was a keynote at one of the biggest Bitcoin conferences earlier this year, one of the biggest ones on the annual calendar, and he made a few promises there.”

First, he promised that the USA would stockpile Bitcoin, “whatever that means”. 

He also promised that he would fire Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), who was extremely hostile in the last four years towards crypto and Bitcoin. 

“So that was a very positive message towards the community.”

Trump’s other talking points included protecting the rights of self-custody. 

De Jager explained that ahead of Trump’s victory, the US saw record outflows from some of the Bitcoin spot ETFs.  

“The institutions were probably looking to move towards liquidity ahead of election outcome uncertainty.”

However, this backfired, since backfired a bit because, after the election, they will get 10% less Bitcoin for their dollars. 

De Jager added that in the past, they have seen investor sentiment in the crypto price be extremely correlated to the political environment and regulatory environment inside the US. 

The US is the biggest market for crypto, and any sentiment, positive or negative, clearly reflects inside the price.

The previous administration was extremely hostile towards crypto.

For example, anti-crypto Massachusetts Senator Elizabeth Warren, the head of the Senate Banking Committee, ran the so-called “Operation Choke Point 2.0”.

“The reason that we are focused on financial institutions and payment processors is because they are the so-called bottlenecks, or choke-points, in the fraud committed by so many merchants that victimise consumers and launder their illegal proceeds,” Financial Fraud Enforcement Task Force Executive director Michael J. Bresnickat explained.  

“We hope to close the access to the banking system that mass marketing fraudsters enjoy — effectively putting a choke hold on it…”

“Operation Choke Point” targeted a number of business categories, including ammunition sales, drug paraphernalia, payday loans, dating services, pornography, telemarketing, tobacco sales, and government grants. 

“That was extremely detrimental to the crypto industry and the price and general regulations,” de Jager said. 

“Just in general, it was extremely negative. So there’s a lot of hope now that this will be turned around.”

However, it remains to be seen whether Trump lives up to the promises he made as a presidential candidate. 

“He made big promises, and a lot of these big promises were also driven by huge donations from the Bitcoin and the crypto community.”

Both big businesses and individuals that are in favour of the pro-Bitcoin policy Trump pushed made “massive donations” to his campaign. 

Although the majority of support came from the Bitcoin community specifically, other cryptocurrency supporters, such as the Ethereum community, also made donations to his campaign.

This obviously filtered through to the promises that he made at the National Bitcoin conference earlier this year, de Jager said.

On several other occasions, Trump also made “very bold public comments towards positive policies”.

“So now, I think we’ll have to see whether he follows through.”

De Jager said that although crypto will likely be at a great advantage in general, “there’s a possibility that Bitcoin would be the big winner out of all of this.”