It recently broke its stratospheric mark to the tune of reaching a surprising $80,000 for the first time in history. This is after optimism that had been closely associated with the cryptocurrency market rebounded following a decisive victory won by Donald Trump in the United States elections.
The move by Trump to propel policies promised on digital assets has been said to be inevitable; he is known to favor them and has the potential to change the face of the U.S. as the leader in cryptocurrencies.
It also promised to build a strategic reserve of bitcoin, replace crypto-hostile financial regulators, and ease some restrictions on digital currencies. Investors are speculating that these moves will likely support innovation in the cryptocurrency space and encourage a more open regulatory landscape.
Trump’s stance has specifically influenced Bitcoin and other major cryptocurrencies like Ethereum and Dogecoin. His position in deregulating the crypto sector aligns well with his more extensive economic policies, including cutting taxes and de-regulating all aspects of the economy.
These proposed policies have spawned a “Trump trade,” where investors buy into assets, like Bitcoin, that they expect to shoot to the moon during a Trump presidency. Some of this excitement is even being seen in smaller altcoins, as Dogecoin-often touted by Trump supporter Elon Musk-rallied sharply.
The shift is not without risk. Analysts warn that the cryptocurrency market is extremely volatile, and although deregulation could bring in investors, it is likely to bring in volatility as well. Trump’s likely move to replace Gary Gensler, the chair of the Securities and Exchange Commission (SEC), with a pro-crypto appointee might just mean all change.
Gensler oversees the Biden administration that has lately been known for attacks on the crypto industry for much-needed regulation to protect the investors. The approach of Trump is going to be that diversified for the reason that it may focus on innovation and free markets than rigid regulatory oversight.
Some believe Bitcoin may rise to, or even above $100,000 if Trump’s administration deregulates the cryptocurrency sector well, making it an even more compelling hedge to inflation. Now, with high risks from high debts and inflation in the US economy, many investors are moving towards other safe stores of value. This economic structure, together with a pro-crypto administration, may only pave for further gains but via a route likely to include some sharp market corrections in between.