On Monday (May 13), Bitcoin rebounded in the short term and returned to above $61,500. As the US presidential election begins in November, David Bailey, marketing director of Bitcoin voucher company Azteco, announced that they have worked with the Republican presidential candidate Donald Trump's team to develop a comprehensive Bitcoin and cryptocurrency policy, which is planned to be signed on his first day in office and will be announced soon. The company's current goal is to raise $100 million in campaign funds for Trump.
"We have prepared a comprehensive executive order for the Trump presidency that he plans to sign on his first day in office, and I will release the details of that shortly," Bailey wrote.
This increases the possibility that Trump will vigorously promote the legalization and widespread use of cryptocurrencies after taking office, further consolidating his influence among cryptocurrency supporters. However, the specific content of Bailey's future policies and the election results of Trump will be clear.
He continued that Trump had taken the first step last week, but there is still a lot of work to be done. Their goal is to raise $100 million for the Trump team to ensure that the next US president can support Bitcoin.
In comparing the degree of friendliness towards cryptocurrencies after Trump and Biden took office, Standard Chartered Bank pointed out in a research report released on May 8 that if Trump is re-elected as US president, it is expected to have a positive impact on the cryptocurrency market.
The report states that the Trump administration will promote a more supportive regulatory environment to further promote the development and application of cryptocurrencies.
Matthew Sigel, head of digital asset research at US asset management giant VanEck, also said in March that if Trump wins the election, it may be more favorable to digital assets and their widespread adoption. However, Jennifer Lee, former assistant director of the US Securities and Exchange Commission's enforcement division, holds a different view. He recently warned the market that if Trump takes over the presidency again, the US Securities and Exchange Commission will continue to strengthen its supervision of the cryptocurrency industry.
Trump publicly supported cryptocurrency at a special event for his NFT holders last week on May 8, calling for: “If you support cryptocurrency, you better vote for me.”
He announced that the United States would stop its hostility towards cryptocurrencies, allow cryptocurrency practitioners to stay in the United States, and open cryptocurrency donations.
Trump also promoted his NFT at the event and called himself an advocate of cryptocurrency. At the same time, he criticized the Biden administration's stance on cryptocurrency, saying it was vague.
It is worth noting that Trump had a negative attitude towards cryptocurrencies in the past, and only in March this year did he affirm the widespread adoption of cryptocurrencies. Therefore, it is not ruled out that this change in position is to attract the support of voters in the cryptocurrency field.
Signs of Bitcoin's price surge: Volatility lower than Nvidia and Tesla
As of May 11, Bitcoin's one-year realized volatility (which represents the standard deviation of returns from the market average) was about 44.88%. In comparison, the annualized realized volatility of the "Magnificent Seven" stocks, such as Tesla, Meta, and Nvidia, all exceeded 50%.
Looking further into Fidelity's report, Bitcoin's volatility is relatively low among the approximately 500 companies in the S&P 500. Analysts pointed out that based on the use of 90-day actual historical volatility data in October 2023, Bitcoin's volatility is actually lower than that of 92 stocks in the S&P 500, some of which are large-cap and ultra-large-cap stocks.
Annualized volatility, which also marks its characteristics as an emerging asset class. Zack Wainwright, a research analyst at Fidelity Digital Assets, said that this high volatility usually occurs when new capital joins the market, especially when the capital is small relative to the existing market size.
However, these new inflows of money can be enough to cause price movements, especially in emerging markets where the market size is still small and the number of participants is limited. In these markets, even small amounts of buying and selling can cause significant price fluctuations because the market is not mature and there is not enough trading volume to absorb the impact of these new funds.
As time goes by and the market matures, Bitcoin's volatility has decreased. This process can be seen in the long-term volatility trend chart, where the regression line is clearly sloping downward, showing that Bitcoin's price fluctuations are becoming more and more stable as market acceptance and trading activity increase.
Zack Wainwright mentioned that Bitcoin's volatility pattern is similar to the volatility of gold in the early market. Gold also experienced similar price discovery and volatility adjustment stages after the decoupling from the US dollar in 1971 and during the period of privatization legalization and inflation surge in 1974. During these periods, the gold market also showed high volatility in the early stage, and gradually stabilized as the market matured and received more policy support.
In addition, Zack Wainwright said that periods of low volatility mean that Bitcoin prices fluctuate less and the market is relatively calm. This stable environment may lay the foundation for future price increases. He cited four examples from the past market for reference, one of which occurred in early 2024, and the other three also experienced a sharp rise in price after experiencing low volatility.
These instances show that when Bitcoin volatility reaches unusually low levels, it can be a sign that the market is about to turn. During these periods, investors may increase their holdings or new investors may enter the market because of the lack of price movement, which increases buying pressure and can lead to a rapid rise in prices once market sentiment shifts.
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