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Donald Trump’s decisive election victory has lit up so-called crypto-bro trades.
Bitcoin surged about 10 per cent. On Wednesday, trading volume for BlackRock’s $33bn iShares Bitcoin Trust exchange traded fund recorded a new daily high of $4.1bn. Other cryptocurrencies and crypto-related stocks also got jolted higher. Coinbase, one of the biggest cryptocurrency exchanges, jumped 40 per cent this week. Online brokerage Robinhood Markets, which offers crypto trading, gained a quarter and MicroStrategy, which says it is the “largest corporate holder of bitcoin”, was up almost as much.
Investors are convinced that Trump’s return to the White House will be a boon for cryptocurrencies. The thin foundations here do not really matter to the market frenzy.
After dismissing bitcoin as a “scam” as recently as 2021, Trump has embraced crypto and recast himself as its biggest champion on the campaign trail this year. At a bitcoin conference this summer, he promised to create a “strategic bitcoin stockpile” and turn the US into “the bitcoin superpower of the world” by bringing more bitcoin mining operations to the country. He has vowed to fire Gary Gensler, the chair of the Securities and Exchange Commission and a fierce critic of the crypto industry, on his first day in office.
Will he keep his promises? Debatable: Trump is known for pledges rather than policy and a propensity for erratic decision making. While a national bitcoin stockpile of the kind that Trump proposed (while pointless) might legitimise bitcoin as a reserve asset and the removal of Gensler could herald a lighter-touch regulatory regime for the industry, none of that is guaranteed. Excitable chatter that bitcoin prices could top $100,000 by the end of the year looks like a stretch.
Cynics would say Trump’s pivot towards the crypto industry is just part of his campaign to court young male voters and drum up industry support and donations for his presidential bid. In any case, it worked. Men turned out in droves at the polls. His efforts to court the bro vote are arguably more successful than his own foray into crypto. World Liberty Financial (WLFI) — the crypto project backed by Trump and his sons — has so far sold just a fraction of the “non-transferable digital tokens” that it had hoped to flog.
Ultimately, however, Trump’s unpredictability in terms of actual policy does not really matter. Mere pronouncements of great things and ensuing market volatility can underpin a crypto boom: bitcoin soared by more than 1,900 per cent during Trump’s first term as president. A sector based on hype and hot air just secured the biggest bloviator of all.