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I'm Stephen Carol and this is Here's Why, where we take one news story and explain it in just a few minutes with our experts here at Bloomberg. Hello, bitcoiners, It's been a season of superlatives for crypto assets.
Just fifteen years. Bitcoin is gone from merely an idea posted anonymously on an Internet message board to being the ninth most valuable asset anywhere in the world. Can you believe that?
Is that? Right?
And most people have no idea what the hell it is? You know that right? So what happens when they figured it out? That's going to really be something.
That was Donald Trump speaking to the Bitcoin Conference in Nashville in July. In the days after the US presidential election, the price of bitcoin swords to new records. Now, crypto investors are used to seeing major volatility and prices, but even by bitcoin standards, this was a blistering rally. Donald Trump has promised more favorable rules for digital assets, a sharp break from the approach taken under Joe Biden. So
here's why bitcoin investors love Trump's win. Our crypto reporter emmely Nicole joins US now for more, Emily, can you put the moves that we've seen in context for US since the election, is a thirty percent move in one week normal?
I wouldn't say it's normal anymore. It might have been in the original you know, early days of crypto, when ass were a lot more volatile, there was a lot less quidity in the market. But these days bitcoin is pretty firmly an institutional play. We have a lot of institutional investors in the space now, especially since the debut of US spot ETF tied to the cryptocurrency in January, and so thirty percent is a pretty big hike.
What exactly is Donald Trump proposing that's got investors in this space so excited overall?
His main mantras that he wants to make the US the crypto capital of the planet. I think is the wording he used back in the summer at one of his campaign rallies. He has gone to bitcoin conferences in the US. He has pledged to make it so that all bitcoin's mind in future would be mined on US soil.
He wants to create a strategic reserve denominated in bitcoin, and he wants to fire Gary Ganzer, the chair of the Securities and Exchange Commission on day one in office, because Genzer has been quite a regular enforcer against crypto companies in recent years, which they view as stymying innovation in the space.
I mean, that's a lot of changes. I mean, how different would you characterize the approach of Donald Trump to this compared to what the US is doing at the moment.
It's very different to the current status square. The Biden administration has been largely hands off, floding, Gary Genzer and the SEC do most of the work when it comes to crypto. There has been an occasional intervention. Biden, for example, vetoing a change to a bill earlier this year that would have allowed banks to custody crypto assets more easily. So there have been some intervention from the Biden administration, and generally that administration has been viewed as not very
crypto friendly. So the reason why bitcoin is now up so much is because Trump going into office means that people are expecting another four years of bitcoin rallies, crypto innovation. We're getting back to that twenty twenty one heyday where assets were going crazy and everyone was buying NFTs, not necessarily that you know, NFTs will be the next big thing, but there would be something of that nature.
Yeah, I mean, are the proposals that we'd heard from Donald Trump realistic. It's a sweeping set of changes.
Some of them are things that he can do right, Like, you know, he can fire Gary Ganser if he wishes to. He can appoint a new SEC chair that fits better with the views he has. He can instruct the Treasury to create a strategic reserve to nominate in bitcoin. But things like asking for all future bitcoins to be denominated on US soil, that's something that's incredibly hard to do.
There's nothing to stop somebody in the UK, Europe, Singapore, anywhere else from setting up a computer to mind some bitcoin,
and that would go against his wishes. I think the reason why he was making that a claim is that a lot of the bitcoin mining equipment out there in the world is manufactured and created by Chinese companies, which is obviously a big thing that Donald Trump has issue with, and so he is trying to pledge that, you know, in part of making the US a crypto capital of the planet, bitcoin should be mined on US soil with US tech.
Who is the US competing with when it comes to being the crypto capital of the planet. Are there other places who are even more favorable to this sector?
Because of the last couple of years of enforcement actions against companies on US soil, there has been a definite flea from the US to other hubs where the rules are perceived to be more friendly. The Middle East in particular, has been making a major push on crypto over the last couple of years, Dubai and Abu Dabi being those two big hubs, so a lot of businesses now have significant presences in those areas. Singapore has also been a big area where a lot of companies have set up
shop as well, trying to tackle the Asian market. And then at the end of this year, Europe is set to fully implement its next stage of the crypto rules. There the market's in crypto assets regulation and with that set to come into force, it's pretty wide ranging. Companies are all thinking about what we should set up an entity in Europe too, because then we can tackle that
market as well. The main thing that companies say that they want is regulatory clarity, and with all of those jurisdictions offering it right now and have been for about a year, they are still miles ahead of what the US wants to be. However, the US is still the biggest market in the world, right, so it can afford to wait a little bit.
Is this rally just about Trump or are there other factors at play that are pushing bitcoin and other crypto assets so much higher.
I'd say it's largely about Trump, but in kind of different ways. Right. So, there's the policies that he's promised to implement. Those are all positive things, but there's also the idea that bitcoin is a risk on asset. It's a way to hedge against inflation, if that's a view
that you share. And so a lot of institutions that will have sat on the sidelines over the last few months of the campaigns when it was next connect between Trump and Kamala Harris, they will now be thinking, Okay, it's now safe for us to get back into bitcoin. It's now safe for us to look at that. We've seen a lot of divergence, for example, between the price of bitcoin and the price of gold. Bitcoin has become much more popular recently over gold, and gold was traditionally
one of those safe haven assets. Because of that, there's also a guess a general institutional swing into the asset class that comes somewhat because of Trump, but also because it's an asset like any other, and it's somewhere that they can now buy into again.
Okay, Emily, thank you very much. That's our crypto reporter, emmely Nicole. For more explanations like this from our team of twenty seven hundred journalists and analysts around the world, search for Quick Take on the Bloomberg website or Bloomberg Business app. I'm Stephen Carroll. This is here's why. I'll be back next week with more. Thanks for listening.