In the week following Donald Trump's election to a second term in the White House, the price of Bitcoin has surged to all-time highs, but a prominent analyst claims that speculation, not policy, is driving the boom.
With the so-called "Trump bump" pushing it up 19% since the US election and more than doubling its value from the end of 2023, the most expensive cryptocurrency in the world exceeded $133,000 on Tuesday.
In addition, S&P Global's cryptocurrency index has gained 27.7% in just one week, while CoinDesk's index of other cryptocurrencies is also rising sharply.
Among them is Dogecoin, a cryptocurrency that has long had the backing of Elon Musk, a significant Trump supporter.
Musk is positioned to hold a significant advisory position in the Trump administration, which may involve advising on matters pertaining to corporate regulation by US government agencies.
Late last year, the billionaire declared that he did not "think about cryptocurrency a lot."
Musk claimed to have given money and its nature a lot of thought. "What is money? In actuality, it is a database for allocating resources.
Crypto rises due to speculation.
According to Professor Angel Zhong of RMIT University, Trump has not yet unveiled any specific policy that would account for the skyrocketing value of cryptocurrencies.
According to Zhong, investors were instead making predictions about the future US president's widespread support for cryptocurrencies in general, hoping he would take action to de-regulate the sector after he takes office.
After all, during the campaign, Trump suggested using Bitcoin to pay off the national debt and introduced his own cryptocurrency.
"Market confidence has also been significantly increased by Elon Musk's outspoken backing for cryptocurrencies, such as Dogecoin and Bitcoin," Zhong stated.
"His remarks and influence have historically affected cryptocurrency prices, and his support of Trump probably strengthens the notion that a more crypto-friendly environment is imminent."
Since the US election, stocks of Musk's electric vehicle firm, Tesla, have surged more than 44% since the beginning of the week, in addition to Bitcoin.
Due to his substantial personal investment in the company, Musk's paper worth has grown by $70 billion in just one week.
Since the election, Coinbase, a publicly traded cryptocurrency exchange, has seen a 40% increase in share price.
Trump speaks openly about cryptocurrency
After previously opposing cryptocurrencies, Trump has now changed his mind and promised to establish a "strategic reserve" of Bitcoin and make the US the "crypto capital of the planet."
At a July gathering of cryptocurrency investors, Trump declared, "Those who love your business, not those who despise it, will write the rules."
However, it is unclear if these pledges will be implemented under Trump's government because they were not major points of his election campaign.
Nonetheless, cryptocurrency donations were accepted by the Trump campaign. In addition, Trump declared that he would "terminate" Gary Gensler, the head of the US Securities and Exchange Commission, for his tough stance on crypto regulation.
Zhong stated that further information regarding the implications of the Trump administration for cryptocurrency markets, including Bitcoin, will be released soon.
"I anticipate greater clarity on crypto-related policies as the Trump administration assumes office, particularly during the 100-day presidential honeymoon period," Zhong stated.
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