As Donald Trump (President-elect) is getting ready to get back into the Oval Office, many traders wonder what impact his second term will have on the cryptocurrency space.
Trump’s previous administration was more of a mix of cynicism and condemnation of digital currencies as a threat to the US dollar. But his policies and politics frequently had unintended impacts on the crypto world.
Experts already have speculations on what Trump’s swearing-in could usher in this time around. And that is exactly why we’re writing this article. This article discusses what crypto traders should expect after Trump’s inauguration.
Trump’s Crypto Stance – History of Style
Trump has long been sceptical of crypto. In 2019 he tweeted, “I’m not a big fan of Bitcoin and CryptoCurrencies, which are not currency, and whose value is very volatile and generated randomly”.
This feeling translated into regulations geared toward tighter control and oversight of the crypto space. However, Bitcoin and other crypto assets rose at times of political tension such as Trump’s first inaugural.
At that time, Bitcoin prices experienced massive surges as investors saw it as a form of protection against economic and political volatility. It is through these lenses that Trump’s re-election might reverberate the markets, and pose threats and opportunities for investors and developers.
Regulation or Innovation? What’s at Stake?
Another Trump’s administration would spark controversies over crypto laws once again. His prior role drew on guidelines that leaned more heavily on controls including tightening Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. This could present a short-term challenge to decentralized networks, but could also ensure stability over time, by rooting out fraudulent models and restoring investor trust.
Furthermore, Trump’s strategy of bolstering the US dollar can indirectly impact crypto use. If his administration is concerned about destroying the dollar through massive spending or trade wars, investors could find refuge in Bitcoin and other cryptocurrencies. This turn out of event was apparent during the global economic turmoil of his first term when Bitcoin was seen as “digital gold”.
Market Reaction: What to Expect
Political shifts raise economic anxiety and tend to drive investors into other forms of capital, such as Bitcoin. During the US election in 2020, for example, Bitcoin gained more than 30% in just one month and is increasingly used as a hedge against risk.
Yet this might also lead to increased scrutiny for exchanges and platforms. Under Trump’s increased regulatory mandate, the unregulated small projects could find themselves in financial trouble; while the large companies could thrive with more clarity.
In Conclusion
Trump’s inauguration will bring tighter controls against crypto innovation and adoption and can rebalance the space. Already, there’s a history of Trump’s policies disrupting the crypto space, but let’s stay positive.
Just as it has been in previous times, ensure you stay informed on market updates and regulatory developments. Stay tuned for more crypto news and reviews like this here.
Joseph Busari
