As Donald Trump has formally ascended to power, the debate on how Bitcoin might fare under his presidency has resurfaced, if not escalated.
Looking back, Bitcoin thrived in 2016, registering a stunning 100% gain in the year. Bitcoin began the year at about $425 and was up at $950 by the year-end. Although Trump-effect cannot be solely credited for Bitcoin’s huge gains in 2016, a large part of the gains came in the latter months of the year, especially immediately prior to and after the U.S. presidential election that delivered a surprise outcome.
Trump, with his inflammatory remarks and policy proposals such as building a border wall between the U.S. and Mexico and renegotiating international trade pacts, created uncertainty in global markets that drove many risk averse-investors to Bitcoin and other digital currencies.
Does the market consider Trump an economic risk?
If markets continue to perceive Trump as a risk to world economy, his term is likely to yield more gains for Bitcoin. Cryptocurrencies are quickly acquiring the status of alternative safe-haven assets to traditional safe havens like gold and other precious metals. Investors rush to safe-haven assets when they perceive risk in the markets, leading to increase in the price of safe-haven assets.
Trump’s administration has Bitcoin supporters
Besides Bitcoin gaining from potential economic uncertainties because of Trump’s unorthodox policies, the appointment of Bitcoin backers to influencial positions in Trump’s administration could also lend support to cryptocurrencies. Mick Mulvaney, Trump’s pick to head the Office of Management and Budget, is an outspoken Bitcoin supporter and investor. He is also a co-founder of a bipartisan blockchain caucus aimed at enlightening Congress on Bitcoin and blockchain technology to enable informed legislation of the industry.
Other than Mulvaney, Bitcoin investor Peter Thiel is also part of Trump’s transition team. Two of Bitcoin startups where Thiel has interest are 21.co and Bitpay.
Though having Bitcoin supporters in Trump’s administration doesn’t guarantee that the administration will fully embrace cryptocurrencies, their presence in the government might cushion Bitcoin and entire cyptocurrency community from adverse legislations.