The Impact of the Trump Administration on Cryptocurrency Markets

Cryptocurrency markets responded cautiously to Donald Trump’s initial policy decisions regarding digital assets. After Trump commissioned a report on crypto regulation and the creation of a crypto reserve, the market experienced modest gains.

Market Overview

Since Trump took office on January 20, Bitcoin (BTC) has remained relatively stable. As of January 24, it traded around $105,000, as the initial excitement about potential changes in cryptocurrency regulation began to fade.

Similarly, ether (ETH) showed a steady performance, gaining 5% during the Asia trading day to reach $3,420.

Bitcoin was initially seen as a favorable investment during Trump’s presidency, skyrocketing 50% after his election victory, fueled by promises of a bitcoin reserve and a welcoming attitude towards cryptocurrency.

Executive Actions

On January 23, an executive order established a digital assets working group. This move seemed to relieve some anxiety among crypto supporters, especially since digital asset reforms were not highlighted in Trump’s first-day policy announcements. However, the executive order provided scant details.

The order, titled ‘Strengthening American Leadership in Digital Financial Technology,’ focused on safeguarding banking services for cryptocurrency firms and forbidding the creation of a U.S. central bank digital currency. The working group has a deadline of July to deliver a report with recommendations for regulatory changes and an evaluation of a national digital asset stockpile.

Nick Twidale, chief market analyst at ATFX Global in Sydney, commented on the situation, stating, “What we’re seeing is a little bit of profit-taking in response to the uncertainty surrounding Trump’s policies. He’s not abandoning his promises, but they might take longer to materialize.”

Reversal of Previous Policies

Trump’s executive order also canceled a 2022 directive from President Joe Biden that urged regulators such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission to provide guidance and address risks within the cryptocurrency ecosystem.

In a related move, the SEC rescinded prior accounting guidelines that made it costly for companies to manage cryptocurrencies on behalf of others—an announcement welcomed by industry executives.

Despite celebrating the new administration with a high-profile event, analysts expressed caution about the sustainability of Bitcoin’s recent price increase. Trump-linked cryptocurrency ventures, like the $TRUMP meme coin and tokens from World Liberty Financial, have seen decreased values, prompting concerns over potential conflicts of interest.

As per Geoff Kendrick, global head of digital assets research at Standard Chartered, a clear commitment to support digital assets—such as an executive order allowing a bitcoin reserve or policies to deregulate the market—would be essential to boost prices further.

Trump, crypto, Bitcoin