Here's Why Bitcoin Investors Love Trump's Win
06:52 Share

When you're with Amex Business Platinum, you have the card that helps you do more of what you love, like a flexible spending limit that adapts with your business. And with five times membership rewards points on flights and prepaid hotels booked on amextravel.com, going the extra mile for your business is even more rewarding. That's the powerful backing of American Express. Not all purchases will be approved. Terms apply. Learn more at americanexpress.com slash amexbusiness.

Meta's open source AI is an open invitation. It enables small businesses, startups, students, researchers, and more to download and build with our models at no cost, which means more people can build amazing things. Because when AI is open source, it's available to all. And when AI is available to all, everyone benefits. Learn more about Meta's open source models at ai.meta.com slash open.

Bloomberg Audio Studios. Podcasts. Radio. News. I'm Stephen Carroll and this is Here's Why, where we take one news story and explain it in just a few minutes with our experts here at Bloomberg.

Hello, Bitcoiners. It's been a season of superlatives for crypto assets. In just 15 years, Bitcoin has gone from merely an idea posted anonymously on an internet message board to being the ninth most valuable asset anywhere in the world. Can you believe that? Is that right?

And most people have no idea what the hell it is. You know that, right? So what happens when they figure it out? That's going to really be something. That was Donald Trump speaking to the Bitcoin conference in Nashville in July. In the days after the US presidential election, the price of Bitcoin soared to new records. Crypto investors are used to seeing major volatility in prices, but even by Bitcoin standards, this was a blistering rally.

Donald Trump has promised more favourable rules for digital assets, a sharp break from the approach taken under Joe Biden. So here's why Bitcoin investors love Trump's win. Our crypto reporter Emily Nicole joins us now for more. Emily, can you put the moves that we've seen in context for us since the election? Is a 30% move in one week normal?

I wouldn't say it's normal anymore. It might have been in the original early days of crypto when assets were a lot more volatile, there was a lot less liquidity in the market. But these days, Bitcoin is pretty firmly in institutional play. We have a lot of institutional investors in the space now, especially since the debut of US spot ETFs tied to the cryptocurrency in January. And so 30% is a pretty big hike. What exactly is Donald Trump proposing that's got investors in this space so excited?

Overall, his main mantra is that he wants to make the US the crypto capital of the planet, I think is the wording he used back in the summer at one of his campaign rallies. He has gone to Bitcoin conferences in the US. He has pledged to make it so that all Bitcoin's mined in future would be mined on US soil. He wants to create a strategic reserve denominated in Bitcoin. And he wants to fire Gary Genza, the chair of the Securities and Exchange Commission, on day one in office because Genza has been quite a

regular enforcer against crypto companies in recent years, which they view as stymieing innovation in the space. I mean, that's a lot of changes. I mean, how different would you characterize the approach of Donald Trump to this compared to what the US is doing at the moment?

It's very different to the current status quo. The Biden administration has been largely hands off, letting Gary Gensler and the SEC do most of the work when it comes to crypto. There has been an occasional intervention, Biden, for example, vetoing a change to a bill earlier this year that would have allowed banks to custody crypto assets more easily. So there have been some intervention from the Biden administration.

administration and generally that that administration has been viewed as not very crypto friendly. So the reason why Bitcoin is now up so much is because Trump going into office means that people are expecting another four years of Bitcoin rallies, crypto innovation. We're getting back to that 2021 heyday where assets were going crazy and everyone was buying NFTs. Not necessarily that, you know, NFTs will be the next big

thing, but there will be something of that nature. I mean, are the proposals that we've heard from Donald Trump realistic? It's a sweeping set of changes. Some of them are things that he can do, right? Like, you know, he can fire Gary Gensler if he wishes to. He can appoint a new SEC chair that fits better with the views he has. He can instruct

the Treasury to create a strategic reserve to nominate in Bitcoin. But things like asking for all future Bitcoins to be denominated on US soil, that's something that's incredibly hard to do. There's nothing to stop somebody in the UK, Europe, Singapore, anywhere else from setting up a computer to mine some Bitcoin. And that would go against his wishes. I think the reason why he was making that a claim is that a lot of the Bitcoin mining equipment out there in the world is

manufactured and created by Chinese companies, which is obviously a big thing that Donald Trump has issue with. And so he is trying to pledge that, you know, in part of making the U.S. a crypto capital of the planet, Bitcoin should be mined on U.S. soil with U.S. tech. Who is the U.S. competing with when it comes to being the crypto capital of the planet? Are there other places who are even more favorable to this sector?

Because of the last couple of years of enforcement actions against companies on U.S. soil, there has been a definite flee from the U.S. to other hubs where the rules are perceived to be more friendly. The Middle East in particular has been making a major push on crypto over the last couple of years, Dubai and Abu Dhabi being those two big hubs. So a lot of businesses now have significant presences in those areas.

Singapore has also been a big area where a lot of companies have set up shop as well, trying to tackle the Asian market. And then at the end of this year, Europe is set to fully implement its next stage of the crypto rules there, the markets and crypto assets regulation. And with that set to come into force, it's pretty wide ranging. Companies are all thinking about, well, we should set up an entity in Europe too, because

then we can tackle that market as well. The main thing that companies say that they want is regulatory clarity. And with all of those jurisdictions offering it right now and have been for about a year, they are still miles ahead of what the U.S. wants to be. However, the U.S. is still the biggest market in the world, right? So it can afford to wait a little bit. Is this rally just about Trump or are there other factors at play that are pertinent?

pushing Bitcoin and other crypto assets so much higher? I'd say it's largely about Trump, but in kind of different ways, right? So there's the policies that he's promised to implement. Those are all positive things. But there's also the idea that Bitcoin is a risk on asset. It's a way to hedge against inflation, if that's a view that you share. And so a lot of institutions that would have sat on the sidelines over the last few months of the campaigns when it was neck and neck between Trump and Kamala Harris, they

They will now be thinking, OK, it's now safe for us to get back into Bitcoin. It's now safe for us to look at that. We've seen a lot of divergence, for example, between the price of Bitcoin and the price of gold. Bitcoin has become much more popular recently over gold and gold was traditionally one of those safe haven assets. Because of that, there's also, I guess, a general institutional swing into the asset class that comes later.

somewhat because of Trump, but also because it's an asset like any other and it's somewhere that they can now buy into again. Okay, Emily, thank you very much. That's our crypto reporter, Emily Nicole. For more explanations like this from our team of 2700 journalists and analysts around the world, search for Quick Take on the Bloomberg website or Bloomberg Business app. I'm Stephen Carroll. This is Here's Why. I'll be back next week with more. Thanks for listening.

In today's data-driven world, you need real data to shape an effective marketing strategy. That's where Ahrefs comes in. Ahrefs is a marketing intelligence platform powered by big data. It shows you exactly what your target audience is searching for and how you measure up to your competitors. Whether you're making day-to-day marketing decisions or defining your long-term digital strategy, Ahrefs delivers real-time insights that help you grow your brand. Head over to Ahrefs.com to get started.

That's A-H-R-E-F-S dot com. This podcast is supported by BetterHelp, offering licensed therapists you can connect with via video, phone, or chat. Here's BetterHelp Head of Clinical Operations Hesu Jo discussing who can benefit from therapy. I think...

A lot of people think that you're supposed to be going to therapy once you're like having panic attacks every day. But before you get to that point, I think once you start even noticing that you feel a little bit off and you can't maintain this harmony that you once had in relationships, that could be a sign that maybe you want to go talk to somebody.

There's always a benefit in talking to someone because we can all benefit from improved insight about ourselves and who we are and how we behave with other people. So if you're human, that's like a good indicator that you could benefit from talking to somebody. Find out if therapy is right for you. Visit BetterHelp.com today. That's BetterHelp.com.