A Bitcoin promise from Trump is what crypto fans once fought against. They love it anyway

Analysis by Allison Morrow, CNN

New York (CNN) — The crypto industry, an institution founded on the principle of keeping the greedy hands of the government off the people’s currency, is thriving. The reason? They may have finally convinced the government to get their hands on Bitcoin.

See here: The price of Bitcoin, the OG digital asset created from computer code 15 years ago, has risen more than 30% since Election Day, repeatedly breaking its all-time high and peaking (at the time of writing) at around $92,000. The price has more than doubled since the start of the year and some analysts predict it could reach $100,000 by the end of the year.

The wider the stock market has also risenwhile Wall Street breathes a sigh of relief as the US election results came in faster and more decisively than expected. But crypto, which often keeps pace with stocks, tends to have higher highs and lower lows, which is why people like to gamble on it. And boy, are they gambling this week.

Much of the hype fueling bitcoin’s rally revolves around expectations that newly elected President Donald Trump will usher in a pro-crypto agenda, lending legitimacy to a sector that has been rejected for years by the mainstream investor class and opposed by supervisors.

“The rally we’re seeing is more of a normalization of what the market dynamics around the crypto sector should be,” Faryar Shirzad, Chief Policy Officer at Coinbase, told me on Tuesday. “I think what we’re seeing is a real, live demonstration of how much the political headwinds we’ve faced over the last four years have suppressed the crypto markets.”

Trump, who said as recently as 2021 that crypto “seems like a scam,” took a critical look at the sector earlier this year, in an apparent change of heart that coincided with the sector’s recovery from the disastrous 2022 (marked in part by the collapse of the economy). crypto exchange FTX and the criminal prosecution of its once high-flying founder, Sam Bankman-Fried). Part of that comeback involved a Coinbase-led Political Mobilization and tens of millions of dollars in crypto profits are being funneled in various races across the countrymaking it the largest spending sector in the 2024 election cycle.

At a massive Bitcoin conference last summer, Trump made two key promises to his audience: First, he would fire Gary Gensler, chairman of the Securities and Exchange Commission and the industry’s archenemy. (Technically, the president cannot fire the SEC chairman, although Gensler is widely expected to resign, as is customary when a new administration takes office.) And second, he would create a national bitcoin reserve by preventing the government from sells the assets. it has been seized in criminal cases.

Trump’s second promise was a bit vaguer, and it may well have been lip service to prevent Robert F. Kennedy Jr. “Bitcoin Fort Knox” to make Uncle Sam the largest holder of bitcoin in the world.

Either way, the result is essentially the same: the US government would hold back the price of bitcoin, an asset built on the idea that governments should not be able to manipulate currency values to suit their interests.

I asked several experts this week about that apparent inconsistency in the crypto ethos.

“Having a strategic reserve by the government is completely at odds with a lot of the ideological side, which is supposed to be about decentralization and anti-authoritarianism,” says Molly White, a journalist and prominent crypto-skeptic. “But I think there’s a belief among some cryptocurrency enthusiasts that says, ‘Well, fine, it’s not really part of the ideology, but it makes the price go up.’”

A more generous view might be that at this point the only real use for cryptocurrencies is to create value that can be traded and bet on. Or, like Bloomberg’s Zeke Faux it said last week: “using real money to gamble on the prices of made-up coins.”

At a basic level, a strategic reserve fully legitimizes bitcoin as an asset class with global systemic significance, Yesha Yadav, a law professor and associate professor at Vanderbilt University, said in an email. “This in itself represents a huge symbolic victory for the crypto industry that two years ago was talked about as dead in the water.”