Since Trump won the US election, the market value of Bitcoin has skyrocketed, from the initial price of about $70,000 per coin to more than $100,000. The increase is as much as 40%, setting a new record. Against the backdrop of rising market value, Bitcoin has surpassed silver and Saudi Aramco in one fell swoop, becoming the world's seventh largest asset, with a total value of nearly $1.93 trillion.
The explosive appreciation of Bitcoin is closely related to Trump's support. In July this year, Trump made a bold promise for the future of Bitcoin at the 2024 Bitcoin Conference, declaring that Bitcoin would be listed as a strategic reserve asset of the United States and make the United States a global Bitcoin superpower. On the same day, the price of Bitcoin soared from $67,000 to $69,000.
It is worth noting that as early as 2019, Trump was a staunch opponent of Bitcoin. Why has his attitude towards Bitcoin undergone such a dramatic change in just five years? What impact will America's support for Bitcoin bring?
U.S. cryptocurrency strategy
In today's digital age, Bitcoin has become a hot topic of discussion, but do you really understand the origin and history of this cryptocurrency? In 2008, an anonymous individual named Satoshi Nakamoto first proposed the concept of Bitcoin, a P2P form of digital cryptocurrency with a fixed total supply of 21 million coins. It can be simply understood as a string of numbers with cash value, possessing characteristics of decentralization, globality, and anonymity, similar to the internet.
Bitcoin can be exchanged for various global currencies, and users can use it to purchase some virtual items. If someone is willing, they can also buy real-life goods; there are no restrictions on the circulation of Bitcoin, which can be used for cross-border transactions, payments, and remittances. The generation of Bitcoin is essentially solving a system of equations—once you find a particular solution to the system, you can obtain the corresponding Bitcoin.
To put it simply, Bitcoin is like the serial number of a Chinese yuan note; as long as you hold the serial number of a particular bill, you own that bill. The popular notion of mining online is essentially about continuously exploring particular solutions to the system of equations through computational power. The Bitcoin equation has a total of 21 million particular solutions, corresponding to 21 million Bitcoins; currently, 19.74 million Bitcoins have been mined globally. Today's Bitcoin market price has already surpassed $100,000.
As early as 2019, Trump publicly expressed his views on Bitcoin on social media: I do not like Bitcoin and all cryptocurrencies; they are not money at all, and their values are highly volatile. If strict regulations are not imposed on these cryptocurrencies, illegal activities will further proliferate, and drug-related crimes will inevitably become more rampant.
However, in just five short years, Trump's attitude towards Bitcoin has undergone a complete 180-degree turn. In February 2024, Trump first stated that he could accept the existence of Bitcoin. In March, during an interview with CNBC, he declared that he would eliminate regulations on cryptocurrencies once elected. In May, Trump's team announced that they would accept all cryptocurrencies as campaign donations.
The climax of Bitcoin occurred in July when Trump publicly stated at a conference that upon returning to the White House, he would resolutely list Bitcoin as a national strategic reserve asset and fully acquire it. Four days later, the Republican Party submitted a 'Bitcoin Bill' to the U.S. Senate, suggesting the government immediately establish a strategic Bitcoin reserve. They proposed selling gold reserves to acquire 1 million Bitcoins in the short term.
After Trump's victory, many newly nominated cabinet members are staunch supporters of Bitcoin. Recently, he has nominated Bitcoin supporter Paul Atkins as the chairman of the U.S. Securities Commission; former PayPal COO David Sacks as the head of cryptocurrency affairs at the White House, which has directly ignited the entire Bitcoin market.
Besides the Republican Party, independent presidential candidate Kennedy also publicly declared in July that if he were elected president, he would demand the U.S. Treasury to establish a strategic reserve of at least 4 million Bitcoins. This plan is even crazier than what the Republicans envisioned. Currently, Pennsylvania has already started responding to the Republican call. On November 14, the state passed a bill requiring the government to allocate $700 million to purchase Bitcoin as a strategic reserve.
Such crazy acquisition of Bitcoin has sparked a global wave of Bitcoin speculation; what exactly do Americans want to achieve? The answer is simple: to solve the debt problem that has plagued the U.S. for half a century.
The American people's calculations
Since the end of President Clinton's term in 2001, U.S. national debt has been continuously rising, severely affecting the long-term political and economic development of the U.S. Four presidencies—Bush, Obama, Trump, and Biden—have been unable to tackle the issue of U.S. national debt, merely watching it escalate.
As of the end of recent years, according to statistics from the U.S. Department of the Treasury, the total amount of U.S. national debt has reached $36 trillion, and its debt management mechanism has completely spiraled out of control. This year, U.S. national debt rose from $35 trillion to $36 trillion in just over three months.
This year, the U.S. government's net fiscal revenue is $4.44 trillion, but this total revenue barely covers half of the maturing U.S. national debt. If this year's fiscal revenue were entirely used to repay debts, the U.S. would still have a staggering $1.7 trillion debt gap.
U.S. Treasury bonds are like a game of musical chairs, seemingly about to explode during the next Trump term. But if Trump wants to solve the debt problem and continue to maintain the dollar's hegemony globally, he must tackle it through digital cryptocurrencies.
To roughly understand the intentions of Americans, it is that once the U.S. lists Bitcoin as a national strategic reserve asset, it will massively acquire Bitcoin globally, and many countries will follow suit. However, with a total supply of only 21 million Bitcoins, in the case of supply and demand imbalance, the market value of Bitcoin is bound to rise significantly, providing the U.S. with space to harvest global wealth. At that time, when settling debts with other countries, if there is a clearance of $1 billion owed, the U.S. can directly present a pile of Bitcoins to settle the account.
If we calculate based on the 19.5 million Bitcoins currently held by the U.S. government, to fully repay the $36 trillion federal debt, each Bitcoin would need to appreciate to at least $1.84 million, which is an 18-fold increase. Furthermore, this is based on the premise that all Bitcoins are in the hands of the U.S. government, thus having pricing power.
According to predictions from international cryptocurrency experts, after Trump takes office again, the price of Bitcoin will rapidly soar to $200,000, and the final price is likely to approach a million. At that time, the U.S. government will also completely control the fluctuations in Bitcoin prices.
Clearly, both Trump and Musk currently advocate for establishing a technology-driven new financial order, aiming to overturn the old financial order of the Federal Reserve, as the old system can no longer bear the pressure of U.S. national debt. However, not all Americans support Bitcoin; for instance, American economist Prasada firmly opposes it, arguing that Bitcoin and other cryptocurrencies have serious value instability issues and are not very trustworthy.
According to surveys, only 5% of Americans have a high level of trust in cryptocurrencies like Bitcoin. However, for the greedier American financial investors, what they focus on is precisely the strong volatility of Bitcoin, making it easier for large capital to control Bitcoin, harvesting retail investors for immense profits. In the later stages, they can also hype up the 'myth of wealth creation through Bitcoin' to drive up Bitcoin prices.
So how should we view Bitcoin? The answer is four words: resolutely oppose! History has repeatedly shown us that greedy capital will set up huge financial scams for us. According to data from the U.S. Federal Bureau, in 2023, cryptocurrency fraud activities in the U.S. caused Americans a staggering loss of up to $5.6 billion.
The current lenient regulation of virtual currencies by the U.S. government reflects a completely irresponsible attitude. The prevalence of virtual economies will hinder the development of the U.S. real economy and will also have a detrimental negative impact on the global economy. Whether the U.S. ultimately fully joins the capital carnival or steadily improves and develops inclusive finance seems like a simple choice, but the implications for the direction of the global economy are profound.
In China, speculating on Bitcoin is explicitly prohibited, as its volatility and difficult-to-regulate nature can have a huge negative impact on the national financial order. Recently, Xinhua News Agency has repeatedly criticized Bitcoin, so regarding the Bitcoin incident, Chinese people should maintain a firm attitude of keeping their distance.