Since the election of Donald Trump in early November, the crypto markets have been on fire. The move since that time was impressive with Bitcoin going from $67K to a peak of around $107K. It has since settled into a range of $93K-$105K.
One problem with this is we are dealing with speculation. Thus far, Trump has not taken office, let alone enacted measures that will benefit cryptocurrency. Certainly, it has discussed his plans but, ultimately, that is just talk. Action is required.
If there is follow through, as opposed to campaign rhetoric, crypto would see some major tailwinds. Even a neutral postion was be a step forward as the Biden Administration, led by Gary Gensler, took an adversarial stance on crypto.
Of course, we have to mention that Trump's first term was not of great benefit. Some will state that it is a different time, which I would agree with. The industry has moved forward to a large degree over the last 4 years, in spite of the pressures put on by the US government (Operation Choke Point 2.0).
Which means the old adage, "talk is cheap" is in play.
Will Trump Provide A Tailwind For Crypto?
There are a number of encouraging signs regarding the direction of this Administration with cryptocurrency.
It starts with the fact that many of the people surrounding Trump are pro-crypto. This was supplemented by the crypto industry getting active in lobbying and election support. Unfortunately, as we all know, politicians can betray those who offer up support.
Moving on to the prospects, we will take things at face value.
One of the first actions, according to reports, is that Trump will sign an Executive Order prioritizing digital assets on a nationwide scale. A Bloomberg article cited information provided by people who saw the EO.
Bascially it is designating cryptocurrency as a national priority, providing a strategy for government agencies to interact with the industry. There is also the idea of forming a crypto council to provide direction.
If this is signed in the first week or so after taking office, it could signal that action is to follow. That would be a postive step.
Of course, it is worth mentioned, especially for those in the Untied States, many of these Executive Orders signed by the President lacks a great deal of power backing them. An EO is not a law. It is simply an order applied to government agencies on directions to take. Often these are challenged in court or end up dying meaninglessly.
One crypto order Biden issued was much about nothing. Here is the headline when it was signed:
If we look at the date, we notice it was signed almost 3 years ago. What happened? Nothing substantial that was a positive.
The point is to not read too much into these. Even if Trump signs an EO, a lot more is required.
Government Talks, Industry Takes Action
One path I can foresee is the new adminstration keeping this at the forefront. What this means is a lot of talk. At some point, action could result but government tends to move slowly.
We will have committess and councils formed that outline policies. From here, others are brought in to fine tune things. Eventually, members of Congress will get on board, starting the process to bring forth bills. They will go through committee, with some reaching the floor for vote.
If passed, then they will be signed into law, unless Trump vetoes it.
Obviously, it is possible to get tired just reading the process. It should drive home how things could be delayed.
That is not a problem. While the government is engaging in their usual circus tactics, the industry can be building. Even removing the headwinds will be a massive step forward. As I stated all along, crypto does not need government to succeed. To me, a bigger priority than government support is infrastructure. We still are dealing with an industry that lacks some of the basic rails for growth.
Market Impact
What is the impact going to be on the market?
This is a loaded question. To start, we have different time frames to deal with. Ultimately, the viewpoint required is long term. This means that development is essential, with businesses offering significant growth. Speculation and promises only last so long (for reference: look up Dotcom bubble).
That said, markets are based upon emotion. If there are some moves in favor of crypto, the markets could get excited. One announcement would be the enacting of Bitcoin being added to the US strategic reserve. My guess is that will send things flying due to the fact that the USG will be a permanent HODLer. It would also open up the door for other countries to mirror that action.
In this instance, politicans will have cover. They can simply state that, if the United States is doing, we have to. The same holds true if The Fed gets into the game. Other central banks will likely take similar actions.
Markets always precede the business buildout They can move a lot faster, and to a higher degree. This is why we have pumps and crashes.
With crypto, we could finally see a major turning point. Getting the US Government out of the way is, to me, a massive boost. The industry can focus upon building instead of dealing with harassment from the likes of Gary Gensler.