Crypto’s ‘Trump Bump’: Temporary or Lasting?

Crypto’s Rise During Trump’s Presidency

The world of digital money, or cryptocurrency, has been buzzing lately. People are talking about a big increase in prices, something they call the “Trump effect.” This happened because of what Donald Trump and his team said and did about digital money during his time as president. When Bitcoin’s price went past $100,000 after Trump was re-elected, many people started wondering if this was a good thing that would last or just a quick change in the market[1]. Let’s find out what’s behind this trend and if the “Trump effect” can continue.

What’s Making Crypto Prices Go Up?

Several things have helped make crypto prices go up during Trump’s time as president:

    • Support and Less Rules: Trump and his team said good things about digital money and made rules less strict. They also chose people who like crypto to work for them, like Howard Lutnick as Commerce Secretary[1].
    • Banks Getting Involved: If rules like SAB121 are taken away, banks could keep cryptocurrencies on their books. This could make more people and big companies want to use crypto[1].
    • Clear Rules: Trump’s team made an order about crypto to give clear rules about who’s in charge and to help people use open blockchain networks. This makes it easier for more people to invest and start new things in the crypto world[3].

Problems and Dangers

Even though people are excited about the crypto boom, there are some problems and dangers to think about:

    • Safety Worries: Making rules less strict could make it easier for bad people to steal money or trick people. In 2023, $5.6 billion was lost to crypto tricks when rules were stricter[1].
    • Price Fluctuations: The crypto market is growing fast, which could make prices go up and down a lot. This could be bad for people who don’t know much about investing[1].
    • Technological Threats: A new kind of computer called a quantum computer could break the codes that keep cryptocurrencies safe, like Bitcoin’s code[1]. This is a big worry for the future.

Will the Crypto Boom Last?

In the end, the “Trump effect” has made the crypto market bigger, but if it will last depends on many things. Trump’s team needs to find a good balance between making rules less strict and keeping people safe. They also need to deal with security problems and new technology. If they do this right, crypto could bring big economic growth and new technology. But if they don’t, it could cause financial problems.

As the United States tries this crypto thing, it’s important to find the right balance between letting people do new things and making rules. If they do this right, crypto could be a great thing. But if they don’t, it could cause problems.

Sources: