Cryptocurrency Boom: Is a Multi-Year Rally Ahead?

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It seems like most of the news this week has been about bitcoin and cryptocurrencies. Between Donald Trump, a crypto convert, and Elon Musk, a crypto enthusiast, everyone is now getting in on the game. By way of example, here’s a few headlines in the past week:

I said, back in July, that Donald Trump would be the crypto-President and now, well, here he is. After heavy support from the world's richest man, Elon Musk, he may become a crypto-puppet, as evidenced by one headline that asks for the end of the Federal Reserve. Who asked for that? You got it: Elon Musk.

What does this mean for the future of the US dollar and bitcoin? Who knows, although it is good news for El Salvador and the Central African Republic, who both adopted bitcoin as legal tender a few years ago.

Will bitcoin and other cryptocurrencies – dogecoin being a key one because of Musk – continue to soar? Well, it looks like it.

Many punters are predicting an above $100,000 bitcoin price by end of year, and everyone wants in on the action. The question, however, is why does Trump love crypto?

Well, as explained in my blog last time, it is how it appeals to his ego. Getting his own NFTs, having the world’s richest man as bestie, getting massive funding for the presidential campaign from the crypto community and more, has converted Trump into the leader of the crypto world.

More than this is the opportunity he sees how to make money out of crypto or, notably, to Make America Great Again.

“If crypto is going to define the future, I want it to be mined, minted, and made in the USA,” Trump declared at the Bitcoin 2024 conference.

That speech also sealed the bitcoin billionaires investments to help fund his campaign to the hilt and, consequently, he won. More than that, all areas of American government are now under the President-Elect’s control.

Pretty cool move, huh … but what does this mean for the future?

Well, first priority will be to get rid of Gary Gensler, the head of the Securities Exchange Commission (SEC) which regulates all things traded. Just the other day, this video clip shows JD Vance accusing Gensler of being the “worst person in Biden administration” for suing Coinbase and Ripple; forcing banks to cut ties with crypto companies, isolating innovators and stifling growth; and making America the worst place to run a crypto business. I guess that is why the new admin is keen to get rid of him. He is a crypto hater, and Trump wants crypto lovers.

So Gary Gensler, the leader of the SEC, is gone …

... or is he? Trump’s pledge to fire SEC Chair Gary Gensler on “day one” is legally impossible under the Securities Exchange Act of 1934, which protects Commissioners from removal without cause, such as inefficiency or malfeasance – none of which apply to Gensler.

Equally, it does not matter if Gensler is a polarising figure in the crypto space. He is in charge. He has actively fought to enforce stringent rules around the crypto space, talking of cryptocurrencies as securities rather than currencies. He's been saying for a long time that alt-coins are unregistered securities and that bitcoin is a commodity and should be treated as such. That centralised regulatory structure is what the crypto libertarians hate, so yay, let’s get Donald Trump in office.

Thing is, what can Trump therefore do to get rid of Gensler whose mandate is good till 2026? Maybe issue an Executive Order? Urmmm … no. An executive order cannot grant the president authority to remove Gensler or other independent agency heads.

So, what can he do?

In a neat article on Forbes Dr. Tonya Evans, a professor at Penn State Dickinson Law, says that he has a few choices, given that administrative and legal barriers are high. For example, as vacancies arise on the SEC, Trump can nominate Commissioners aligned with his vision for the crypto industry which would surround Gensler with opposition inside the organisation. Or he could change the law such as a new SEC Stabilization Act, which would restructure the agency by replacing the Chair role with a bipartisan executive committee.

Once Gensler’s gone, then crypto will become the core of the future focus for the USA. The price will rocket further, and the US dollar will become inextricably tied to the second reserve currency of the world: bitcoin.

Thing is that Donald J. Trump is only going to have the Seal of the President until 2029. If the democrats win the next term, what would they do with his crypto fandom?

Well if one senator, Elizabeth Warren, has anything to say about it, the whole thing will be reversed. In testimony to the Senate earlier this year, here is what she said:

Crypto is being used to help finance major threats against national security like North Korea's nuclear weapons program, Iran’s ability to evade sanctions, and ransomware attacks on American hospitals. It seems the problem is getting worse. According to the Wall Street Journal, “crypto has become indispensable to Vladimir Putin's war machine, allowing Russia to get around sanctions and to throw billions of dollars into its war against Ukraine. According to the Treasury Department, Hamas's terrorist attacks against Israel in October were financed in part with crypto and their current financing depends on crypto.

The list goes on.

In other words, we have a Republican President Trump and his team who love crypto and a Democrat opposition who hate it. Get ready for a rocky ride ahead.

Related: What Does Trump’s Victory Mean for Banks, Tech, Fintech and the Future?

Postscript: Love the fact that a Senator came up with the idea for a “The Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide Act of 2024” ... or the B.I.T.C.O.I.N Act for short. Between the DOGE (Department of Government Efficiency) and the BITCOIN Act, these guys are clearly crypto believers.