What Donald Trump as president would mean for Bitcoin

The long-awaited debate between former President Donald Trump and incumbent President Joe Biden took place last night. Following the exchange of blows, the likelihood of US citizens electing Trump to the White House in November has increased significantly. As Trump has also increasingly spoken out in favor of Bitcoin in recent weeks, the question arises as to what a presidency for the 78-year-old could mean for the asset.

The likelihood of Biden's re-election plummeted from over 35% to under 20% in response to his weak performance. The incumbent president made such a poor impression that there were even calls to nominate another candidate for the Democratic Party at short notice. Whether Biden runs himself or Gavin Newsom, the governor of California, will probably not change the fact that Donald Trump is likely to become US president for a second time.

The debate in question was never about Bitcoin. This was not to be expected, although Trump spoke out in favor of Bitcoin and the industry surrounding it several times during his election campaign.

Nevertheless, this may have caused some disappointment in the Bitcoin community. According to a survey by Michael Saylor, the founder of Bitcoin-focused company MicroStrategy, almost 70% of voting 𝕏-users assumed that Bitcoin would be discussed in the duel.

Even if the Bitcoin price has not reacted positively to the debate, which ended favorably for Trump, his presidency could have far-reaching consequences for Bitcoin. Since the beginning of May, the former president has repeatedly spoken out in favor of Bitcoin and Co. and emphasized that he would be the president to support the sector. He has repeatedly criticized his opponent and the Democrats per se for the "anti-crypto course" and described it as a "war on crypto".

In the summer of 2021, the former president told FOX Business that Bitcoin looked like a scam to him. However, when his pro-Bitcoin stance recently met with great approval, he went one better. Trump then accepted Bitcoin and Co. for campaign donations and emphasized that he wants all future Bitcoin to be mined in the USA.

Trump also promised that he would release Ross Ulbricht from prison on the first day of his inauguration. Ulbricht is the founder of the darknet marketplace Silk Road, where goods could be purchased with Bitcoin more than ten years ago - one of the first uses of Bitcoin as a means of payment.

Furthermore, serious rumors are circulating that Trump will appear at the Bitcoin conference in Nashville at the end of July. Meanwhile, phrases like the following are a recurring feature in his campaign rallies.

At the beginning of June, multinational bank Standard Chartered predicted that the price of Bitcoin could rise to USD 150,000 by the end of the year if Trump wins the presidential election. Geoff Kendrick, head of digital asset research, cited the crypto-friendly stance of the likely next US president as the reason for this.

As we approach the US election, I expect $100,000 to be reached and then $150,000 by the end of the year in the event of a Trump victory.
_{Geoff Kendrick}

There is a capital market saying that political stock markets have short legs. But in the case of Bitcoin, this is not necessarily the case. For example, the approval of Bitcoin spot ETFs in the US turned out to be a strong price driver. And should a national leader advocate for the country itself to buy Bitcoin - as is the case in El Salvador - then this could catapult the Bitcoin price to unimagined heights, at least in the case of the USA.

In general, positive regulation that ensures that the Bitcoin industry can develop more freely in the US would certainly be positive for Bitcoin adoption and indirectly also for the price. Support for the Bitcoin mining industry, which Trump has already announced, could also contribute to this.

However, there are also indications that the Republican could actively cause the price of Bitcoin to rise. David Bailey, the CEO of Bitcoin Magazine and a direct supporter of Trump's election campaign, told 𝕏 that Trump had told him he wanted to add several trillion US dollars to Bitcoin's market capitalization. For an asset that is only worth around 1.2 trillion US dollars, this would mean a multiplication of the price.

In an audio discussion on 𝕏, the CEO of Bitcoin Magazine also reportedly said that Trump had asked him whether the US could solve its national debt problem with Bitcoin. If Trump really does use Bitcoin as a strategic tool to improve the US's financial situation, then Bitcoin is likely to experience an upswing that is second to none.

Donald Trump is a proponent of a looser monetary policy. During his last term in office, he increasingly spoke out in favor of lower interest rates. In addition, the presidential candidate and his allies are said to already have plans to overhaul the US central bank. Moreover, the Republican is not on good terms with current Federal Reserve Chairman Jerome Powell - he does not want to reappoint him as Fed Chairman if he is elected to the White House in November.

As the amount of money in circulation generally rises when interest rates are lower due to the increased creation of credit money by the banks, an increase in liquidity could be expected if Trump becomes president. As already mentioned, this would certainly fuel the price of Bitcoin.

At the same time, Trump also wants to push through a series of tax cuts, which could further stimulate the economy and thus the capital markets. However, due to this combination, some economists assume that inflation could also pick up significantly under Trump.

In this context, some economists are even talking about high waves of inflation like in the 1970s or even hyperinflation, which Trump could trigger. Due to its limited total volume of just under 21 million units, Bitcoin is suitable as a protection against rampant inflation, which benefits in particular if there is a stronger devaluation of money - as was the case in 2020 and 2021.

However, high inflation, insofar as the central bank combats it with a restrictive monetary policy, i.e. with high interest rates, could also have a negative impact on the price of assets such as Bitcoin. This was observed in 2022. However, some economists fear that the Federal Reserve could completely lose its supposed independence under Trump and keep interest rates low despite high inflation rates.

Although it currently looks very much as if Donald Trump will be elected president for the second time in November, a lot can still happen in the almost four months until then. It also remains to be seen whether the Republican will continue to campaign for Bitcoin even after an election that goes in his favor.

In any case, a Bitcoin-friendly US president could significantly boost the adoption of Satoshi Nakamoto's creation in the medium term. But even if Trump's presidency could possibly lead to a sharp rise in the price of Bitcoin for a variety of reasons, it is less relevant for the long-term development of the asset which person holds which office.