The US presidential campaign has turned to Bitcoin, a crypto known for its price fluctuation and negative effects on the environment.
Donald Trump, the former US president and Democratic candidate for the upcoming vote, hosted the biggest Cryptocurrency meeting of the year in Nashville on July 27.
If Trump is re-elected as president after the election, he said in his speech that he would make the United States the” crypto capital of the planet and the world’s Bitcoin power.” The crowd roared out in awe of his remarks.
Trump’s desire to dominate the blockchain sector is almost certainly social. Since accepting bitcoin gifts in May, the Trump plan has already raised US$ 25 million from the industry, and more are anticipated to follow the Nashville event.
His public support of crypto definitely boosted trader optimism. The price of Bitcoin surged to almost$ 70, 000 on July 29, its highest level in more than six weeks, before dropping back to$ 62, 000 a few days later.
However, issues remain regarding whether Trump’s policies will be implemented if he is elected president. Even so, it’s unclear whether Trump’s pro-crypto policy will include a long-term impact on Bitcoin’s value.
Currency’s price surged and fell within a year
In his statement, Trump pledged to keep” 100 % of all the Cryptocurrency” the US government already holds or acquires in the future if he is elected.
Some countries, including the US, keep Bitcoin. Cryptocurrency that has been seized from offenders accounts for a large portion of these assets. How to handle this seized crypto is a complicated issue.
The victims of crypto crime might receive a opposing message if they are not selling it. Chinese fraud victims, for example, have previously urged the UK government to return £3 billion ($ 3.8 billion ) in Bitcoin held by London police.
Recovering stolen Bitcoin may be a part of their actions if governments really want to safeguard consumers from crime and fraud in bitcoin markets. So, Trump’s promise to keep all of America’s Bitcoin investments may not be functional.
Besides that, Bitcoin was designed primarily as a fragmented money. The fact that it operated separately from any central authority was its main draw.
Since its commencement in 2009, the degree of autonomy has decreased. Key mining pools, which combine their computing resources to improve their chances of “mining” fresh Bitcoins, currently own a sizable portion of the currency.
Big people may become even more powerful if they add significant government holdings to Bitcoin. Most cryptocurrency users probably do n’t want this.
Another major impediment to the widespread adoption of Bitcoin and another blockchain-based inventions is the lack of regulatory clarity. From this viewpoint, Trump’s pro-crypto plan may be welcomed by the blockchain society, as he may create a more positive environment in the US for crypto miners, startups and other crypto entrepreneurs.
Trump criticized vague and overly stringent US laws at the Nashville conference, threatened to fire SEC chair Gary Gensler due to his antagonistic attitude toward the sector, and warned that Kamala Harris ‘ candidacy would derail the blockchain community.
Trump said:” We does have restrictions, but from now on the guidelines will be written by people who love your business, not love your business”. However, the details of how these fresh” crypto-friendly” officials will achieve their goals if Trump is elected remain unclear.
In 2023, the SEC led key studies into crypto’s major troublemakers. The leader of the now-bankrupt FTX crypto exchange, Sam Bankman-Fried, for example, was sentenced to 25 years in prison for fraud and was ordered to renounce US$ 11.2 billion.
The US has the power to make the area safer for all participants. However, it’s uncertain whether these anti-crime measures will remain under Trump’s fresh crypto-friendly administration.
Despite the uncertainty surrounding the November election, crypto users have different concerns about the government’s Bitcoin holdings.
Governments selling their Bitcoin holdings contribute to the volatility of the currency, which has fallen by 15 % since Germany started selling off roughly € 2.5 billion ($ 2.7 billion ) of confiscated Bitcoin at the beginning of June. However, Bitcoin is also a highly speculative property that is vulnerable to news, social media, and media coverage.
The position of the US government on Bitcoin’s economic issues, which are the subject of many media censure, may also impact its value in the long term.
To add new tokens to the blockchain and remedy various scientific puzzles, Bitcoin mining usually uses a lot of computing power. It uses a lot of electricity and water, as well as producing a lot of electrical waste.
In January of this year, the US government had started a project to track mining operations ‘ power consumption. A federal prosecutor in Texas, who ruled that the business would suffer “irreparable harm” if the new demands were implemented, halted the action.
Communities that are affected by Bitcoin’s enormous reference consumption does not agree with Trump’s pledge to aid US Bitcoin mining. For instance, households in Texas are currently paying higher energy bills in regions where Bitcoin is mined on a massive range.
The US and other important international political parties ‘ goals, among others, determine Bitcoin’s future. Regardless of government rules, there are numerous factors that affect the price of Bitcoin, but any promises should be read with precaution.
For Trump’s vows to impact Bitcoin’s cost in the long term, they must be backed by large and regular measures. Often, they will only bring about momentary price fluctuations, as they have been reported in the previous week.
Larisa Yarovaya is Director of the Centre for Digital Finance, Associate Professor in Finance, University of Southampton
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