Bitcoin hits new highs: Is Trump’s pro-crypto agenda the catalyst?

United States President-elect Donald Trump’s re-election has ignited a fresh wave of enthusiasm in the cryptocurrency market, with Bitcoin achieving an all-time high of over $80,000.

Investors across the globe are reacting to Trump’s plans for crypto regulation, spurring gains for major digital currencies and related assets. After historically criticising cryptocurrencies as “based on thin air,” Donald Trump has drastically changed his stance on digital assets, openly embracing them in recent months.

During his campaign and following his election win, Trump expressed a vision of transforming America into the “crypto capital of the world,” a promise that has fuelled optimism in the market.

His victory has been accompanied by bullish market activity, with Bitcoin surpassing $80,000 on Sunday, marking a 4.5 per cent increase to $79,800.19, according to Coin Metrics.

The excitement surrounding his return and pro-crypto stance has even caused smaller coins to soar, with XRP up 11 per cent, Cardano jumping 40 per cent, and meme tokens Dogecoin and Shiba Inu experiencing gains of 17 per cent and 31 per cent, respectively.

What Trump has in mind for crypto

Trump has shown a unique perspective on cryptocurrencies, floating ideas such as creating a national Bitcoin reserve similar to America’s Strategic Petroleum Reserve. This reserve, according to Trump, would help secure the nation’s financial future by “mining, minting, and making Bitcoin in the USA.”

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He also stated the need to keep mined Bitcoins within the US as a security measure. In August, Trump stated, “Cryptocurrencies could define the future.”

Adding a personal financial interest to his pro-crypto position, Trump and his children launched a crypto venture called World Liberty Financial in September. The venture, described by Trump as “very young and very growing,” is one of the first examples of a former president actively engaging in the cryptocurrency space.

The company’s initial sales launch struggled to meet targets, but its potential impact on the market remains significant.

How the crypto market has changed

Since election day, Bitcoin has surged by 18 per cent, with Ethereum — another major player in the crypto market — rising 32 per cent to $3,203.10, after breaking the $3,000 level. In parallel, major crypto exchange Coinbase saw a 48 per cent increase last week, marking its best week since January 2023.

Charles Morris, an analyst at ByteTree, told AFP that “the odds that Bitcoin and crypto will become a significantly larger asset class have risen markedly,” and that this trend could continue well into Trump’s term.

French crypto analyst Stephane Ifrah anticipates Bitcoin hitting new milestones, telling AFP that it may reach $100,000 within the next year, driven by an unprecedented regulatory shift.

This shift could be a game-changer for the industry, potentially turning what was previously an “oppressive headwind” under the Biden administration into a “tailwind,” as described by Alex Thorn, head of research at Galaxy Digital.

Thorn explained in a research note, “Crypto is poised to enter a golden era. Trump’s high-level team is filled with strong crypto advocates… the pro-crypto nature of his team, family, and donors increases the likelihood that Trump follows through on his campaign promises to the industry.”

How has India received the news

The global surge in cryptocurrency trading volumes reached a three-month high last week, according to data from CoinGecko, as exchanges worldwide felt the ripple effect of Trump’s election.

However, for Indian investors, the response has been mixed. Despite the global upswing, unfavourable tax policies in India dampen enthusiasm. Gains on crypto assets in India are taxed at a high 30 per cent rate, with an additional 1 per cent tax deducted at source (TDS) on each transfer.

These regulations, coupled with a security breach at the major Indian crypto exchange WazirX, have left many Indian investors cautious.

Instead of directly investing, some Indian investors may consider US-listed Bitcoin spot exchange-traded funds (ETFs) as an alternative. These ETFs, which track Bitcoin prices without requiring actual ownership of the coin, offer tax advantages compared to domestic exchanges.

However, investors should remain aware of additional fees, including a 20 per cent tax collection at source under India’s Liberalised Remittance Scheme (LRS).

How Biden’s approach on crypto differed from Trump’s

Under the Biden administration, the crypto industry faced increased scrutiny and regulations. SEC Chairman Gary Gensler consistently has voiced skepticism about the sector, highlighting it as “ripe with fraud, scams, and abuses.” Gensler’s tenure saw high-profile cases against crypto companies and a cautious approach to approving Bitcoin ETFs.

Although the SEC eventually approved a Bitcoin ETF, it was not without controversy; earlier this year, a hacked tweet from Gensler’s account mistakenly announced the ETF’s availability, temporarily driving up crypto prices, reported CNN.

In stark contrast, Trump’s return has sparked confidence among investors, who anticipate a more favourable regulatory environment.

Elon Musk, an outspoken Trump supporter and crypto enthusiast, remains a significant influence within this pro-crypto community, especially regarding Dogecoin, which surged over 20 per cent on Sunday. Musk is expected to play a key role in shaping the administration’s crypto policies, with rumours that Trump may even appoint him to lead a broad governmental review of financial waste.

The excitement in the cryptocurrency market is palpable, as Trump’s presidency is seen as a green light for digital assets to thrive.

With inputs from agencies