Donald Trump and the future of Bitcoin

PRESIDENT-elect Trump’s victory has ignited the crypto markets generally and Bitcoin in particular.

From the most recent peak at the end of July of about £54,000 it fell back to a low of £41,000 on September 7 - roughly a 25% drop. September 28 saw £49,500 followed by a drop in early October to about £46,500.

The end of October saw £56,000, and another drop until November 5 taking it back down to around £52,000. During that day, as the votes were cast, it became clear Trump was going to do it. And in view of all he said, Bitcoin took off to the extent that it stood at about £59,000 2.

So here’s the thing. £56,000 to £59,000 isn’t such a wonderful thing. Good old Uptober did much better. And – being the cautious soul I am – at that point I have to question if we are going to see a big follow through.

The price struggled after the initial euphoria. And America being what it is, a lot of the statements Trump made will end up in the courts. There may be a Republican majority on the Supreme Court, but it will take years to get there – and there is no guarantee it would side with Trump. A lot would depend, I think, on the exact policies being enacted.

And then all of a sudden, Bitcoin and the crypto market generally took off.  As of now Bitcoin stands around £71,000.

The markets are attracting new money. And why? There are two scenarios. Either Trump will start a trade war (tariffs and stuff) in which case crypto might be a hedge against it. Or he really will ignite American hegemony again including making America the crypto capital of the world. Either way, crypto wins.

Solana, Ethereum and lots of the also-ran cryptos have done better than Bitcoin, and I would have to ask if that is because Tradfi has adopted Bitcoin and traduced it by the creation of ETFs. That said there is less than $75billion within those ETFs which represents under 5% of the market cap.

Bitcoin, though, has climbed a bit further up its dominance ladder and currently stands around 59% of the total crypto market - as opposed to next up, Ethereum, on about 15%.

So Bitcoin and Ethereum together are still over 70% of the total. To date, it looks as if ETFs have made their sales from money withdrawn from crypto exchanges – in other words there is no net new money going into crypto. That, I think, has now changed.

The point, of course, is what happens next – on which very large sums of money both are and have been wagered. Perhaps I should not use the word 'wagered', but cryptocurrency being cryptocurrency, that is perhaps the best word.

I repeat again that this fourth halving feels different to those that have gone before and ETFs and The Donald being re-elected have much to do with it in my view. The rise since before the election has been down to Trump’s words regarding crypto and the future course he wants for it.

As ever, it remains to be seen how it pans out, despite him having done a Bitcoin transaction a few days ago. The current price structure seems to suggest the momentum is there at the moment at least.

All the boosters are already screaming about the price in 2025 being above $150,000 and that may indeed happen. But just a small thought. $150,000 would represent a rough doubling of the market cap. That in turn would hoover up about $1.5 trillion and take Bitcoin’s market cap to $3 trillion. That would have to be new money to sustain the situation, not withdrawn from exchanges. That might happen ( and this is no investment recommendation)

And even in this day and age, that is quite a lot of spare cash sloshing about when there are myriad other calls on investors cash. Especially as the sage is cashing up quite a lot of stocks and stashing hundreds of millions away at 5%. 

That in itself is pulling investors' cash away from crypto. Is it for an elephant he hasn’t found yet? Because he thinks valuations are overdone? Because he thinks he’s going to be able to pick up lots of cheap deals soon? Or because he thinks things are teetering on a precipice?

Interestingly, CoinTelegraph polled nine so-called experts as to the year-end value of Bitcoin. The price varied from about $59,000 to around $103,000, with an average around $85,000. Even ignoring the bottom and the top it still came in around that number.

As they used to say of Nathan Rothschild, Rothschild knows, but I very much doubt that anyone else does.