The crypto sector is booming thanks to Donald Trump, a digital asset influencer | Crypto assets

Immigration, abortion, inflation, war. The issues that the US election campaign focused on have been repeated in recent years, with greater or lesser priority. But in the latest elections, a hitherto largely ignored issue has gained some importance: cryptocurrencies. Donald Trump has focused part of his campaign on supporting these technology-based digital currencies. blockchain. The Republican, in fact, became the first crypto president of the United States not only for investing in these assets, but also for his promises to the sector, for example, turning the North American country into the “crypto capital of the planet.” As announced at the Bitcoin 2024 conference held last July in Nashville.

The possibility that the United States will become center digital assets have dramatically increased the sector in the markets. Fibrillation, euphoria, boom: These words describe what the industry has experienced since November 5 last year. The price of major cryptocurrencies skyrocketed, especially trailblazer Bitcoin, which topped $93,000 intraday for the first time in its history (its closing high was $88,600). Companies associated with these assets experienced double-digit price increases, reaching all-time highs. Adding to that record influx of money were spot bitcoin ETFs, investment products created by traditional Wall Street institutions that mirror the asset’s valuation and allow funds or individual investors to invest more easily: “Demand (for the ETF) was about $560 million on Tuesday. Since their approval in January, they have recorded positive net flows of $27 billion and have become the most successful products in history,” details Manuel Villegas, digital asset analyst at Julius Baer.

To understand the scale of this success, Eric Balchunas, senior ETF analyst at Bloomberg, cites some data: BlackRock’s iShares Bitcoin Trust (IBIT) raised $40 billion faster than any other ETF before (211 days), and now that’s more than that. or released in the past. the last 10 years. Experts are predicting a revival in approvals of new investment vehicles, which are currently stagnant, thanks to Trump’s support.

The Trump effect has had a full impact on the cryptocurrency ecosystem, something that would have been unlikely just five years ago when the Republican disdained these assets as scams. In just five years, he has made a 180 degree turn and now portrays himself as the industry’s savior in the face of the outgoing administration’s and regulators’ “anti-cryptocurrency crusade.” This change has a simple explanation: although there are no exact numbers, the number of people who own cryptocurrencies in the US is about 50 million, with a range of voices and potential donors.

Trump’s speech, real or fake, aligns with the priorities of much of the crypto community: a deep distrust of the traditional financial system, government, and central banks. For this reason, Trump also found in this group of investors a way to raise funds, such as the million dollars in Bitcoin contributed by each of the Winklevoss twins, investors and entrepreneurs in the crypto universe who became famous for the legal battle they argued with Mark Zuckerberg over the original idea of ​​a social network Facebook.

Digital assets have become a political issue, especially since Trump launched his own project, World Liberty Financial, surrounded by figures favorable to the sector such as Tesla founder Elon Musk (who donated $118 million) and partners such as Zach Folkman and Chase Herro . , described by American media as cryptopunks. Charles Hoskinson, co-founder of the platform blockchain Ethereum and Cardano founder showed his doubts: “He took something bipartisan and turns it into partisan,” he said in an interview with The Ethereum and Cardano founder. Financial Times.

Adding to the sector’s approval are Republican promises to the cryptocurrency world. A plan to create a strategic Bitcoin reserve (similar to a gold reserve), a commitment to change the leadership of the US Securities and Exchange Commission (SEC), which is currently skeptical of these assets, and the adoption of soft regulation – unlike MiCA, European regulation, which to take effect at the end of December, creates a new scenario for the industry that Binance CEO Richard Teng has defined as the beginning of a “golden era.” This gave wings to Bitcoin, which rose 35% after Election Day to reach a value of $1.7 trillion: if it were a company, it would be the seventh most valuable, ahead of Meta and Tesla.

The market value of all cryptocurrencies together has reached 2.8 trillion and surpasses giants such as Alphabet and Amazon, thanks to the performance of Bitcoin, which accounts for 59% of the market, as well as other digital assets such as Ethereum, the second most popular. , which grew by 26%. Added to this are other minor players such as Solana, which is up 25%, and Binance Coin (BNB), which is up 8.3%. However, none of them managed to beat the all-time high. Villegas explains that this is due to Bitcoin market concentration, the macroeconomic environment and high interest rates.

Among all the cryptocurrencies, there is one that stands out. Dogecoin, queen memcoins. These digital assets are similar to Bitcoin or Ethereum, but they do not have a technological base or specific purpose to support them; They are even more volatile and prone to flare up in the heat of social media. Dogecoin, known for using the image of Japan’s popular Shiba Inu dog breed, has soared 120% since Election Day, reaching a market value of about $60 billion, more than BBVA. This rise is associated not only with the Trump effect, but also with the arrival of Elon Musk in the new Republican administration: together with businessman Vivek Ramaswamy, he will head the Department of Government Efficiency. As Musk himself recalled in X, the agency’s abbreviation, DOGE, is the code by which this currency is known in crypto markets. The world’s richest man has repeatedly hyped the currency, sometimes praising it, sometimes suggesting it could be used to buy Tesla cars. His Dogecoin holdings have been the subject of speculation several times, but to date it is unknown how much he owns: last January, in a conversation on X Spaces, he said that he has “a lot of DOGE” without elaborating. quantity.

The Tesla founder announced his appointment with an image in X: a Shiba Inu dog, next to a US flag and the name of the new organization, without putting too much emphasis on the possible manipulation of quotation marks. For Judith Arnal, principal researcher at the Royal Elcano Institute and the Center for European Policy Studies (CEPS), this is a paradigmatic example of how cryptoassets can be abused. “I’m very concerned that the person who will be leading the Trump administration would dedicate himself to publishing this when it comes to speculative assets that have no intrinsic value or support,” he comments. According to the expert, the risk is that these announcements heat up the markets, favoring the entry of unsophisticated retail investors into them, and that they will ultimately bear the heavy losses.

Cryptocurrency companies at the peak of popularity

The Trump effect has become more than just gasoline for cryptocurrencies. Firms in the sector also saw a strong rebound in the midst of a Republican’s return to the White House. Simon Peters, investment platform analyst and trade Multi-asset eToro highlights this: “Stocks linked to the crypto sector, such as mining companies, have been positioned as the best performing assets in stock markets since the election results.”

MicroStrategy is a case in point. For four years, the software company, founded in 1989, has been betting on Bitcoin. On August 10, 2020, its founder and current president, Michael Saylor, a strong advocate of cryptocurrencies, began buying the asset, theoretically to hedge against inflation. In a short time, he has turned the company into a bitcoin accumulator: he sells debt to be able to buy this digital asset. No company owns more Bitcoin than it: With about $18 billion in Bitcoin on its balance sheet, it just announced its intention to increase that number by selling up to $42 billion in shares and debt. For this reason, the securities of this company are very sensitive to movements in exchange rates and have risen in price by 2500% since August 10. After Trump’s victory, they rose more than 40% and set a new all-time high of $356.59 per share.

Coinbase, the largest cryptocurrency asset trading platform in the US, is also up more than 40% since November 5th. Just before the election, its legal director, Paul Grewal, suggested that both candidates would represent an improvement over the outgoing administration, with the prospect of greater regulatory clarity. Next to exchange,

Cryptocurrency mining companies (the process by which transactions are verified and confirmed on the cryptocurrency network while new units of those assets are created) such as Mara Holdings and Riot Platforms are growing 55% following Trump’s promise of increased mining activity and lower taxes . “We want all remaining Bitcoins PRODUCED IN THE UNITED STATES!” the Republican wrote on his Truth Social account last June.

While markets appear to be cooling somewhat, analysts believe the bullish momentum in the cryptocurrency market could continue, and in the case of Bitcoin, the dream of reaching $100,000 before the end of the year is just one step away from fulfillment. Julius Baer’s Villegas is hesitant to make predictions, but explains that he sees no obstacles that could prevent prices for this asset from rising.

Meanwhile, investors’ attention is focused on the United States. Trump has plenty of wiggle room to deliver on his promises: Republicans have essentially secured full control of Congress, both the House and the Senate, which is expected to be the largest. parliament crypto-friendly forever. However, some analysts are cautious. Judith Arnal warns of the risks of putting someone outside the law in charge of the SEC: “You can’t fire Gary Gensler (the institution’s president) because he is an independent authority, but it could make his life very difficult. Putting someone outside the law in charge of the Securities and Exchange Commission or having a coded Congress, what does that mean? Complete deregulation? Wild West? In the medium term, for activities that generate a lot of added value in this ecosystem, I think this is not a positive thing.”