Bitcoin‘s price continues to maintain its position above $63,000 as the MTGOX saga unfolds following recent sales in Germany. Some of the reserves have found their way back to the Kraken exchange, with billions of dollars in assets set to be returned to creditors within the next 7-14 days. However, the extent to which investors who purchased BTC at $200 will sell remains uncertain. Economist Alex highlights more significant medium-term impacts.
What Will Trump’s Policies Mean?
Donald Trump’s recent pro-crypto stance has significantly contributed to Bitcoin’s upward trajectory. For over a year, discussions have centered on the positive impact of the November elections on cryptocurrencies. Recently, this narrative has gained traction among investors, buoyed by Trump’s supportive statements regarding crypto.
Economist Alex Krüger emphasizes the potential for the Trump administration to introduce favorable regulations for cryptocurrencies, potentially fostering innovation and adoption. Krüger also notes that Trump’s administration might prioritize tax cuts, reduced government spending, and other economic measures, which could lead to higher inflation expectations and rising long-term interest rates.
Can Financial Institutions Benefit?
Krüger suggests that deregulation in the financial sector could lower compliance costs and boost the profitability of financial institutions. A steeper yield curve, driven by the widening gap between short-term borrowing rates and long-term lending rates, would further benefit these institutions. Krüger advises traders to consider Trump’s victory pragmatically, setting aside political biases when making trading decisions.
Key Inferences for Investors
– Monitor potential regulatory changes under a Trump administration that could impact crypto markets.
– Consider the implications of tax cuts and reduced government spending on inflation and interest rates.
– Evaluate how deregulation in the financial sector might enhance the profitability of financial institutions.
– Trade based on potential political outcomes rather than personal political beliefs.
Initially a critic of cryptocurrency, Trump has shifted his stance as elections near, showing a willingness to coexist with Bitcoin. In May 2018, he directed Treasury Secretary Steven Mnuchin to crack down on Bitcoin and crypto frauds. However, as the elections approached, his statements became more moderate. This shift in attitude has been supported by significant crypto figures and companies, including a $2 million BTC donation from the Winklevoss twins and backing from Coinbase and other U.S. firms.