Thu, 01/23/2025 - 15:51
This week marked a historic moment for world politics as Donald J Trump was sworn in for a second time at a bombastic inauguration ceremony held at the Capitol Rotunda in Washington, DC. But it isn't just Republicans who are celebrating the start of the second Trump term; crypto enthusiasts everywhere are rejoicing at the potential upside for digital assets that this represents. Trump has been an outspoken proponent for the crypto industry as a whole, and he and his wife even launched their own $TRUMP and $MELANIA meme coins ahead of his re-ascension to the White House. Trump's digital currency gained spectacularly from 19-20 January and even now stands at $37.10 (23/01), a full 444% up from its opening price. The Official Melania Meme project, however, has fared less impressively and is now down over 60% from its ICO price.
Clearly, these self-admitted meme coins were never intended to represent the expected impact of Trump's reign on cryptocurrencies, though $TRUMP could ultimately prove a good investment for some. What investors are rightly excited about is the incoming administration's commitment to smaller government and less regulation, but with Trump's trademark unpredictability, much is yet to be seen.
Regular guy
It's true that a Trump White House is likely to be favourable for all crypto projects, and the markets clearly agree, given BTC's gain of 10% in the days leading up to the inauguration. Trump has promised to make the US the crypto capital of the world and is even preparing executive orders to elevate crypto to a national policy priority and form a Presidential Council of Advisers for Digital Assets, which is sure to include crypto evangelist Elon Musk. The signs from the SEC are also largely positive, with acting Chair Mark Uyeda already launching a "crypto task force" aimed at "developing a comprehensive and clear regulatory framework for crypto assets". This is a far cry from the hectic times of former head Gary Gensler, where there was no holistic approach to crypto at all.
Other possibilities that have been discussed more generally include potential tax relief and capital gains clarification for crypto owners, widescale crypto payment acceptance for government services, and even tax breaks for US-based crypto companies. Whispers have even been heard about an executive order that would ban a CBDC 'digital dollar', as well as another pausing legal cases against crypto companies until more legal clarity is achieved. With the scene now set for Trump to deliver on his crypto promises, we would be wise to expect a positive four years ahead for digital assets as a whole.
Loose cannon
Despite strong messaging on crypto and the positive regulatory and legal framework he seems to be planning, Trump always brings an element of unpredictability. The impact of this on the wider market is, by definition, difficult to anticipate, but one initial sign came with the launch of the aforementioned meme coins by Trump and his wife. Some crypto enthusiasts predictably celebrated $TRUMP's release. Eager buyers drove up the price to over $70 at one point. But then the announcement of First Lady Melania Trump's own meme project — to initially positive response — led to a drop in both coins' values. What might have been intended as a sign of support for the industry totally misfired. Tom Schmidt, a partner at a crypto venture capital firm, Dragonfly, was quoted as saying, "It felt very grifty and cheap". Just at a time when the crypto industry is trying to gain legitimacy in the eyes of regulators and more traditionally minded Americans, the President and his wife put out meme coins that only provide ammo to his and crypto's critics. From his COVID response to pulling out troops from Syria, Trump's first term was awash with policy U-turns, and it's simply impossible to be sure that crypto won't become yet another reversal. Nonetheless, the general market environment is still largely positive for digital assets for the time being, with lower interest rates and price stability set to support more established projects like Bitcoin, Ethereum and Ripple, for instance.
Trade crypto and more CFDs with Libertex
With Libertex, you can trade a wide variety of CFDs across multiple asset classes. Libertex's crypto CFD offering includes legacy digital assets like Bitcoin, Ethereum and XRP, as well as the Grayscale Bitcoin Trust and over 100 different altcoins. For more information or to create an account of your own today, visit www.libertex.com/signup.
