Over the past two weeks, the crypto markets have literally gone crazy. A day after Donald Trump’s victory in the US election, Bitcoin began to climb the price ladder to reach on Friday, November 22, at the foot of the previously unthinkable $100,000. And with it, other cryptocurrencies rose in price, with the market capitalization quickly passing 3.2 trillion dollars and continuing to increase.
However, the explosive growth has already caused experts in the sector to start asking many questions about the prospects and dynamics of what is happening. And the most reasonable among them are how long the increase in price will continue, is it reasonable or speculative, and whether it is not a question of inflating a bubble, which after some time will be abruptly deflated.
The “Trump” effect, which followed the resounding victory of the Republican in the US elections, reverberated in all sectors of the US economy and in other parts of the world, but only in the crypto industry the direction remains one - only up. The former future president himself is helping this rise in every possible way, such as hastily appointing one of the most prominent supporters of the growth of the crypto sector – Elon Musk, as the head of the newly formed Commission on Government Efficiency. And a related company even bought a cryptocurrency trading platform a few days ago.
An objective analysis requires the recognition that the crypto sector strongly hopes that Trump will fulfill his promises to be a “crypto president” and, with the help of the Republican-controlled Congress, impose new, more liberal regulation of the sector, according to Reuters. One of the possible measures in this direction is the wider entry of crypto-assets into everyday life and their transformation into a real alternative to traditional cash.
Among the measures the sector expects from the future US administration are executive orders allowing crypto companies to gain access to banking services and the appointment of “friends” of the crypto industry to key positions. First of all, it is the Securities and Exchange Commission (SEC), now headed by the “hawk” and founder of traditional finance, Gary Gensler. His days at the helm of the committee, his supporters and detractors alike admit, are numbered.
“We had an administration that was negative about crypto, and we expect the new one to remove the barriers,” said Mike Bilshey, CEO of institutional crypto platform BitGo, which hosted a campaign fundraiser in July. Trump. “I think the voters in the US have clearly shown what they want,” he added, quoted by Reuters.
Appointing pro-crypto activists to key positions could happen quickly after Trump takes office in January, but changing the regulatory framework is a longer process that could take months or even years to go through all the institutions, notes Associated Press. The future president also promised to create a Council for the development of the crypto sector, although he did not clarify either how the said council would work, nor what its members would be. “Everyone in Washington is wondering who will fill what positions in the agencies that are responsible for the finances of the country,” said Keira Calvert of “Coinbase”. “This is especially important for both companies like ours and small startups.”
Admittedly, Bitcoin started to rise again well before it became clear that Trump would return to the White House. Since the beginning of the year with the launch of exchange-traded funds (ETFs) based on cryptocurrencies, Bitcoin has gained momentum and reached many more investors.
In recent weeks, however, crypto market participants have increasingly focused on the question of when, rather than if, Bitcoin will break the psychological $100,000 mark, according to Bloomberg. “Buyers are literally suffocating sellers,” says analyst Tony Sycamore. “While I’m not sure the market will remain calm if it reaches and crosses that line, demand doesn’t seem to be able to be met for now.” Which gives the impression of a balloon being inflated.
On Wednesday, MicroStrategy, the largest publicly traded corporate holder of bitcoin, announced it was doubling its planned sale of convertible notes to $2.6 billion to fund the token purchase. Until recently, the little-known software maker has now become a veritable “repository” for bitcoins, with assets worth about $31 billion.
A dozen U.S. exchange-traded funds investing in bitcoin raised $5.8 billion in the two weeks after Election Day, according to Bloomberg data. Thus, their total assets reached an unprecedented 100 billion dollars.
According to Caroline Moran, co-founder of Orbit Markets, which provides liquidity for crypto-derivatives, $100,000 per bitcoin is an “important psychological threshold” that can be easily crossed despite the increasing volatility of the market.
Whether the crypto sector enters a true new renaissance or inflates a bubble ready to burst at the right time will depend in large part on whether Trump follows through on his promise made in July at an industry conference to create a strategic US bitcoin reserve . The seemingly ambitious goal now seems fully achievable, say managers from the sector, quoted by Reuters. “It would completely legitimize crypto-assets,” said Marshall Beard, CEO of the Gemini crypto exchange, whose founders are among Trump campaign donors.
Exactly how the crypto market will develop will become truly clear in two-plus months, when the new administration takes office and takes its first steps. Until then, opinions about what exactly is happening in the crypto sector remain more or less in the realm of speculation.
What impact do Bitcoin ETFs have on the cryptocurrency market?
Interview Between Time.news Editor and Crypto Expert
Editor: Welcome to Time.news, where we explore the latest trends and developments shaping our world. Today, we’re diving into the recent surge in the cryptocurrency market, particularly Bitcoin, which has seen dramatic increases following the US elections. Joining us is Dr. Jane Lutton, a leading expert in cryptocurrency and financial markets. Jane, thank you for being here!
Dr. Lutton: Thank you for having me! It’s an exciting time for the crypto world, and I’m eager to discuss these developments.
Editor: Absolutely! So, just to set the stage: Bitcoin recently approached the incredible $100,000 mark, coinciding with Donald Trump’s election victory. Why do you think this rally has occurred now?
Dr. Lutton: The timing is certainly intriguing. The “Trump effect,” as it’s being called, has had a significant impact on market sentiment. Investors are optimistic that Trump will implement more favorable regulations for cryptocurrencies, which contrasts with the previous administration’s approach. The anticipation of a “crypto-friendly” government has led many to reinvest in Bitcoin and other digital assets.
Editor: You mentioned regulation. Can you elaborate on what kind of changes we might expect from the new administration?
Dr. Lutton: Certainly! There’s considerable hope within the crypto sector that the new administration will remove some of the barriers that have hindered its growth. This could include executive orders that allow cryptocurrency firms easier access to banking services, as well as appointments of people who are sympathetic to the industry to key positions, particularly in the SEC.
Editor: It sounds like the crypto community is optimistic, but I’m curious—are there concerns about this current price surge? Some experts warn that it could be speculative or might even lead to a bubble.
Dr. Lutton: That’s a valid concern. Market bubbles often occur when prices rise rapidly without a corresponding increase in value or utility. While there is substantial demand driving prices higher, many analysts, like Tony Sycamore, are noting that sellers are being overwhelmed. If that balloon does pop, it could lead to a significant correction.
Editor: Interesting. So, what specific measures could stabilize the market and help mitigate these bubble risks?
Dr. Lutton: One approach would be for the SEC to provide clearer guidelines on cryptocurrency regulations. This would help legitimate businesses thrive while weeding out bad actors. Additionally, growing the use of cryptocurrencies in everyday transactions could add intrinsic value to the market, making it less vulnerable to speculative trading.
Editor: Speaking of stability, there seems to be talk of Bitcoin ETFs contributing to the current surge. How important have these financial instruments been in gaining mainstream acceptance?
Dr. Lutton: Extremely important! Bitcoin ETFs have opened the door for traditional investors who may have been hesitant to buy cryptocurrencies directly. The access to Bitcoin through conventional trading platforms adds a layer of legitimacy and has attracted a new wave of institutional investors, which has been paramount for Bitcoin’s price recovery this year.
Editor: With all this market dynamics and regulatory talk, what advice would you give to a retail investor trying to navigate this current landscape?
Dr. Lutton: It’s crucial to do thorough research and understand that the crypto market is highly volatile. Diversification is vital, as with any investment. Also, keeping an eye on regulatory news is essential, as it can significantly impact market conditions. it’s wise to invest only what you can afford to lose.
Editor: Wise words, indeed! Thank you, Dr. Lutton, for sharing your insights with us today. It’s clear that the cryptocurrency landscape is evolving rapidly, and staying informed will be key for all investors.
Dr. Lutton: Thank you for having me! It’s been a pleasure to discuss these exciting developments.
Editor: And thank you to our viewers for tuning in to Time.news. Stay connected for more updates as we continue to track the fast-paced world of cryptocurrencies!