Why bitcoin surged to $100K US after Trump’s election and where it goes now #CriptoNews

Donald Trump has put cryptocurrency front and centre in his path to the White House, driving the price of bitcoin to record highs and sparking fierce debate.

The incoming U.S. president has even signalled potentially creating a strategic reserve of bitcoin.

At the New York Stock Exchange this week, CNBC host Jim Cramer asked Trump whether he would push ahead with such a plan.

“Yeah. I think so. We’re going to do something great with crypto,” he replied.

Since Trump won the U.S. election, bitcoin has climbed above $100,000 US for the first time. Now, he’s filling his administration with pro-crypto advisers, and seems to be backing the idea of a bitcoin reserve held by the U.S. Treasury, which analysts say could boost the price by another 50 per cent. Supporters say he could put the U.S. at the forefront of a technology that they view as revelatory — while critics say it’ll further entrench wealth inequality.

Trump’s turn toward crypto

Trump is a recent convert on the issue of cryptocurrencies, once calling bitcoin a “scam” against the U.S. dollar. But during the campaign, he heralded himself as “the first major party nominee in American history to accept donations in bitcoin and crypto.”

It’s unclear what prompted his change of heart. But he and his family launched their own cryptocurrency during the recent campaign.

And, he said, that was just the beginning.

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

He’s 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) who built the financial technology firm in the early 2000s, and have since founded or played major roles in other tech companies.

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He’s been a vocal proponent of bitcoin and cryptocurrency dating back to as early as 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 for a mere $129 US. If he invested $1,000 US then, it would be worth nearly $800,000 US today.

Now, Sacks has a key job within the next administration, shaping how the industry will be regulated. In July, he posted on X that the industry’s main desire was a clear legal framework.

“If Trump wins, the industry will get this, and more innovation will happen in the U.S.”

Reserve not a new idea

The idea of a strategic reserve was gaining steam even before Trump won the election.

A bill proposed this summer by Republican Sen. Cynthia Lummis of Wyoming, a Trump ally, would require all bitcoin held by any federal agency be transferred to the Treasury to be held in a strategic bitcoin reserve.

It would also mandate the Treasury secretary to purchase no more than 200,000 bitcoins a year over a five-year period, for a total of one million bitcoins.

The U.S. Treasury would be required to hold onto those bitcoins for at least 20 years.

Crypto enthusiasts say the reserve would position the United States as a world leader in the world of cryptocurrency, which they view as the future of the financial system. They also say bitcoin will soar to new heights if the new administration backs the idea of a strategic reserve.

“I think it’s headed for a range of $250,000 [US] to $500,000 [US per coin],” said analyst Ronnie Moas, founder of Standpoint Research.

Moas says the Trump presidency has put new wind in the sails of crypto, and the moment a bitcoin reserve is announced, the price will spike again.

“[It] will move the price overnight by between 25 and 50 per cent, because you’ll have a flood of people coming in trying to jump in front of the government’s purchase, which is going to take months or weeks to get off the ground,” Moas said this week.

Moas is no fan of Trump, calling him an “idiot” and a “scam artist,” but he says he is right on bitcoin.

Others are just as adamant that a bitcoin reserve fund is a fundamentally bad idea.

Among the naysayers is Larry Summers, an economist and former U.S. Treasury secretary.

Summers says there may well have been a decent argument in favour of creating a strategic petroleum reserve or to build up hordes of gold at Fort Knox a century ago.

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

“Some of what is being said — this idea that we should have some kind of national bitcoin reserve — is crazy,” Summers said on Bloomberg Television’s Wall Street Week with David Westin.

Well-funded push for crypto-friendly government

The push for a more crypto-friendly administration in Washington is powerful and well-funded.

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

And it wasn’t just the president who won — many pro-crypto Senate and House candidates also won in key races. Candidates who lobbied for more crypto restrictions lost.

Among them was Democrat Sherrod Brown, current chair of the Senate Banking Committee, and an outspoken critic.

In what will likely be his final statement with the committee, Brown warned about the dangers of issues including algorithmic prices, AI and, of course, crypto.

“All these risks have one thing in common: they all have the potential [to] take even more money away from working Americans … and funnel it to the same corporate elite that always seem to come out ahead.”

Last year in its first Cryptocurrency Fraud Report, the FBI found American consumers lost more than $5.6 billion US last year through crypto-related fraud, an increase of 45 per cent from 2022.

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

Critics say the potential for fraud is all the proof they need that crypto should be kept from the mainstream. Supporters will say it simply underlines the importance of building what Sacks called a “clear legal framework to operate under.”

Either way, Trump’s embrace of crypto has already injected new interest, new value and new concerns. And it’s still five weeks until he formally takes office.