Source: Intelligencer
By Kevin T. Dugan
Welcome to the Donald Trump Era of Crypto
Compiled by: BitpushNews an
On Monday morning, the research firm Bernstein gave its Wall Street clients advice on cryptocurrencies: “Take what you can.” Fifteen years after the birth of Bitcoin, the call for enthusiasm might be dismissed because it seems to come from a zealot. But Bernstein is not some crypto-obsessed junket operator but part of the venerable French investment bank Societe Generale, with roots dating back to the 1960s, when the U.S. was on the gold standard. The report quickly became a sensation in the financial world. When I started writing this column, the price of Bitcoin was at a new high, topping $82,000; when I finished it, it had topped $88,000. In terms of volume, this may be the biggest day in the history of cryptocurrencies.
Welcome to the Trump era of crypto. It’s been less than a week since Trump was elected, but it’s looking increasingly likely that the next four years in crypto will make Sam Bankman-Fried a benign symbol of the industry. There’s been no wholesale shift to the utopian promises of a digital future by Wall Street’s most cynical financiers. No new inventions have been invented, no new uses have been discovered, making it more likely that Bitcoin, or any other digital currency, will become part of your daily life. The logic here is that the boom madness of the pandemic era could return in full force again — this time, like Trump, the industry is encouraged to get bigger, richer, and more unabashed.
There’s no guarantee that Bitcoin or any other digital token will be worth more tomorrow than it is today. Volatility and high risk are a core part of investing in cryptocurrencies, and that didn’t change on Nov. 6. But by 2025, cryptocurrencies look like the industry’s best chance to turn itself into more than just a financial sideshow — and over the next four years, crypto is absolutely looking to institutionalize itself. The coming Trump economy, if it looks anything like the last one, will be great for business, with lower taxes and interest rates, freeing up more money for people to speculate on. And the crypto industry has made it as easy to buy cryptocurrencies as it is to buy anything else on the New York Stock Exchange. Broadly speaking, that means more money flowing into the space, bringing higher prices and less volatility. Ever since regulators allowed 401(k) money to flow into bitcoin ETFs this winter, giants like BlackRock have been serving as a bridge between the traditional and digital financial worlds — which in turn has made the crypto industry even bigger.
The biggest difference with a Biden administration, however, may be how the industry will regulate itself. That’s because of an extremely aggressive lobbying campaign. Coinbase CEO Brian Armstrong bet he could raise more than $100 million from his industry to elect a crypto-friendly government — and he ended up winning a string of historic victories that rival Wall Street’s greatest trades ever. Bloomberg counted 48 races where crypto money backed candidates, and the industry won every one. (There are eight remaining, and all but three seem to be tilting in the industry’s favor.) The most powerful crypto industry opponents in Washington, D.C., including Democratic Ohio Sen. Sherrod Brown and Securities and Exchange Commission Chairman Gary Gensler, are out of work. Their victors, like Brown’s successor, Bernie Moreno, have openly pushed for laissez-faire treatment for cryptocurrencies. Wyoming Sen. Cynthia Lummis has introduced a bill that would require the Treasury Department to buy and hold 1 million bitcoins as a “strategic reserve” over the next 20 years.
It’s not just lawmakers. Howard Lutnick, who oversaw Trump’s staffing, is the CEO of investment bank Cantor Fitzgerald — which happens to be where the crypto industry’s lifeblood stablecoin Tether keeps its money. Elon Musk, who bankrolled Trump’s get-out-the-vote operation for at least $119 million, is a major backer of cryptocurrencies — specifically Dogecoin — and Tesla also owns a ton of Bitcoin. (He’s vowed to oversee a government efficiency department to root out public spending, which, I have to say, is a crypto joke.)
Of course, Trump’s first term saw the wild cryptocurrency bull run of 2017, when he prosecuted numerous scams and frauds. The crypto industry’s biggest complaint now is that the federal government has not set specific rules for cryptocurrencies, but instead uses the courts to set policy. Although this practice began with Trump, when he wrote that he was “not a fan of Bitcoin and other cryptocurrencies, which are not currencies and whose value is highly volatile and based on thin air.” But starting in July, when Trump pledged at the annual Bitcoin conference to cut Gensler’s influence and make the United States a global cryptocurrency hub, his shift was accepted by the industry without hesitation.
That’s what’s got Bernstein and many on Wall Street excited: plowing money into a relatively new asset class at a time when regulators and federal prosecutors seem ready to let it grow. Coinbase and MicroStrategy, a tech company that holds $10 billion in bitcoin, saw their market caps soar on Monday. The total market value of all cryptocurrencies is almost $3 trillion — about the size of France’s economy. In fact, the only digital asset that’s losing money among the 100 largest is Monero, a cryptocurrency favored by countries like North Korea because it’s useful for laundering large sums of money. (Trump’s first term saw the lowest number of white-collar crime prosecutions in decades, so it’s not clear that money laundering will be a priority.)
Last year, Bloomberg reporter Zeke Faux published a book called Number Go Up about the various scams and frauds facilitated by cryptocurrencies. "The Number Go Up technology is a very powerful technology," he said, according to the book. "It's because of the price of the coin. As the price goes up, more and more people become aware of the cryptocurrency and buy it, and then expect the price to continue to climb." Of course, what he described paved the way for many of the Ponzi schemes that have defined the crypto industry to date, especially the collapse of SBF's crypto empire. Cryptocurrency skeptics have been making the same arguments against it over and over again: digital assets are a slow and expensive form of money, and their best uses are either speculation or crime.
Maybe, in the long run, all this speculation will lead to another FTX-like crash — and this time it might be bigger than the last one. But for now, people in the crypto world are going crazy.
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