After a bit of a slumber, Bitcoin has woken up to become the highest-priced cryptocurrency at present. On Tuesday, November 12, Bitcoin surged to a record high of $89,000. Rumors have it that the sudden surge might be related to the election of Donald Trump as the 47th president of the United States. What’s the connection? Could this be the only reason for Bitcoin’s sudden rise? Let’s dive deep into the unpredictable world of cryptocurrency.
Bitcoin soars higher: Revisiting good old times
Looking back, in 2011 Bitcoin price started growing past $1, reaching a high of $29.60 on June 8, 2011. However, a sharp recession occurred in cryptocurrency markets just after that leading to its price dropping at about $5. Since its birth, the market for this cryptocurrency has been quite volatile. Starting from 2009, it has seen many ups and downs. But 2024 seemed a profitable year. Starting with the U.S. Securities and Exchange Commission (SEC) approval for about 11 spot Bitcoin ETFs, which gave it a sense of legitimacy. Now it has broken all price records and touched $93,400, before settling around $90,000.
The US has been a mature crypto market with approximately 30-40% of people holding crypto in some form. However, the record breaking price comes just after Trump got elected as the US president. Analysts suggest that there could be many reasons for the sudden rise. One could be Trump’s love for crypto which he showcased during the presidential campaign. Trump’s embrace of cryptocurrencies during the presidential campaign and his venture into crypto trade is luring investors on the expectation that the new administration would be crypto-friendly.
“Trump’s pro-crypto stance, regardless of political affiliation, could strengthen the U.S.’s financial power and position it as a leading hub for innovation and investment in the crypto space,” Shahzad Nathani, Head of Operations and Partnerships, Shardeum, said.
Trump had also promoted donations in cryptocurrency, during the presidential campaign. He also claimed that he will make the United States as the ‘Crypto capital’ of the planet. Another reason could be the rumored secret crypto venture by Trump and his three sons Donald Jr, Eric, and Barron when they introduced their latest entrepreneurial endeavour, World Liberty Financial. Notably, World Liberty Financial is a decentralised finance (DeFi) money market platform. This new venture introduced a proprietary cryptocurrency named $WLFI. However, not much is known about this ‘secret venture.’ But it does imply that Trump may support cryptocurrency trading.
“Promises of establishing a strategic Bitcoin reserve and naming crypto-friendly regulators have already been encouraging optimism in the market as Bitcoin has soared and investors sought fresh interest in the U.S.-based crypto opportunities. A balanced approach by the U.S. could foster global crypto growth,” Avinash Shekhar, Co-founder, and CEO, Pi42, concluded.
The future roadmap
As reported by the Fear and Greed Index, a key market sentiment measure, it is being indicated that the crypto market has an “Extreme Greed,” mark. This suggests that there is a high confidence among crypto investors and traders. In addition to Trump’s win, other key reasons could be a supportive regulatory environment, the rise of institutional investment, and growing demand for crypto ETFs. To conclude, looking at the constant support from different regulatory bodies and famous personalities, Bitcoin and other cryptocurrencies might regain their crowns.
“The return of Trump has sparked renewed optimism in the crypto market. His pro-crypto stance has energized the broader community, helping fuel the recent rally. Additionally, recent Federal Reserve rate cuts have created a more favourable macroeconomic environment for crypto investments,” Balaji Srihari, Business Head, CoinSwitch, explained.
It must be noted that cryptocurrency trading in India is a complex process with regulations not in its favour. While it is legal to hold and trade cryptocurrencies, it is not considered legal tender in India. And the complexities of investing or withdrawing investments from cryptocurrency along with tax implications has dissuaded investors from this market.
