Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: I'm Stephen Carol and this is Here's Why, where we
Speaker 2: take one news story and explain it in just a
Speaker 2: few minutes with our experts here at Bloomberg. Hello, bitcoiners,
Speaker 2: It's been a season of superlatives for crypto assets.
Speaker 3: Just fifteen years. Bitcoin is gone from merely an idea
Speaker 3: posted anonymously on an Internet message board to being the
Speaker 3: ninth most valuable asset anywhere in the world. Can you
Speaker 3: believe that?
Speaker 1: Is that? Right?
Speaker 3: And most people have no idea what the hell it is?
Speaker 3: You know that right? So what happens when they figured
Speaker 3: it out? That's going to really be something.
Speaker 2: That was Donald Trump speaking to the Bitcoin Conference in
Speaker 2: Nashville in July. In the days after the US presidential election,
Speaker 2: the price of bitcoin swords to new records. Now, crypto
Speaker 2: investors are used to seeing major volatility and prices, but
Speaker 2: even by bitcoin standards, this was a blistering rally. Donald
Speaker 2: Trump has promised more favorable rules for digital assets, a
Speaker 2: sharp break from the approach taken under Joe Biden. So
Speaker 2: here's why bitcoin investors love Trump's win. Our crypto reporter
Speaker 2: emmely Nicole joins US now for more, Emily, can you
Speaker 2: put the moves that we've seen in context for US
Speaker 2: since the election, is a thirty percent move in one
Speaker 2: week normal?
Speaker 1: I wouldn't say it's normal anymore. It might have been
Speaker 1: in the original you know, early days of crypto, when
Speaker 1: ass were a lot more volatile, there was a lot
Speaker 1: less quidity in the market. But these days bitcoin is
Speaker 1: pretty firmly an institutional play. We have a lot of
Speaker 1: institutional investors in the space now, especially since the debut
Speaker 1: of US spot ETF tied to the cryptocurrency in January,
Speaker 1: and so thirty percent is a pretty big hike.
Speaker 2: What exactly is Donald Trump proposing that's got investors in
Speaker 2: this space so excited overall?
Speaker 1: His main mantras that he wants to make the US
Speaker 1: the crypto capital of the planet. I think is the
Speaker 1: wording he used back in the summer at one of
Speaker 1: his campaign rallies. He has gone to bitcoin conferences in
Speaker 1: the US. He has pledged to make it so that
Speaker 1: all bitcoin's mind in future would be mined on US soil.
Speaker 1: He wants to create a strategic reserve denominated in bitcoin,
Speaker 1: and he wants to fire Gary Ganzer, the chair of
Speaker 1: the Securities and Exchange Commission on day one in office,
Speaker 1: because Genzer has been quite a regular enforcer against crypto
Speaker 1: companies in recent years, which they view as stymying innovation
Speaker 1: in the space.
Speaker 2: I mean, that's a lot of changes. I mean, how
Speaker 2: different would you characterize the approach of Donald Trump to
Speaker 2: this compared to what the US is doing at the moment.
Speaker 1: It's very different to the current status square. The Biden
Speaker 1: administration has been largely hands off, floding, Gary Genzer and
Speaker 1: the SEC do most of the work when it comes
Speaker 1: to crypto. There has been an occasional intervention. Biden, for example,
Speaker 1: vetoing a change to a bill earlier this year that
Speaker 1: would have allowed banks to custody crypto assets more easily.
Speaker 1: So there have been some intervention from the Biden administration,
Speaker 1: and generally that administration has been viewed as not very
Speaker 1: crypto friendly. So the reason why bitcoin is now up
Speaker 1: so much is because Trump going into office means that
Speaker 1: people are expecting another four years of bitcoin rallies, crypto innovation.
Speaker 1: We're getting back to that twenty twenty one heyday where
Speaker 1: assets were going crazy and everyone was buying NFTs, not
Speaker 1: necessarily that you know, NFTs will be the next big thing,
Speaker 1: but there would be something of that nature.
Speaker 2: Yeah, I mean, are the proposals that we'd heard from
Speaker 2: Donald Trump realistic. It's a sweeping set of changes.
Speaker 1: Some of them are things that he can do right, Like,
Speaker 1: you know, he can fire Gary Ganser if he wishes to.
Speaker 1: He can appoint a new SEC chair that fits better
Speaker 1: with the views he has. He can instruct the Treasury
Speaker 1: to create a strategic reserve to nominate in bitcoin. But
Speaker 1: things like asking for all future bitcoins to be denominated
Speaker 1: on US soil, that's something that's incredibly hard to do.
Speaker 1: There's nothing to stop somebody in the UK, Europe, Singapore,
Speaker 1: anywhere else from setting up a computer to mind some bitcoin,
Speaker 1: and that would go against his wishes. I think the
Speaker 1: reason why he was making that a claim is that
Speaker 1: a lot of the bitcoin mining equipment out there in
Speaker 1: the world is manufactured and created by Chinese companies, which
Speaker 1: is obviously a big thing that Donald Trump has issue with,
Speaker 1: and so he is trying to pledge that, you know,
Speaker 1: in part of making the US a crypto capital of
Speaker 1: the planet, bitcoin should be mined on US soil with
Speaker 1: US tech.
Speaker 2: Who is the US competing with when it comes to
Speaker 2: being the crypto capital of the planet. Are there other
Speaker 2: places who are even more favorable to this sector?
Speaker 1: Because of the last couple of years of enforcement actions
Speaker 1: against companies on US soil, there has been a definite
Speaker 1: flea from the US to other hubs where the rules
Speaker 1: are perceived to be more friendly. The Middle East in particular,
Speaker 1: has been making a major push on crypto over the
Speaker 1: last couple of years, Dubai and Abu Dabi being those
Speaker 1: two big hubs, so a lot of businesses now have
Speaker 1: significant presences in those areas. Singapore has also been a
Speaker 1: big area where a lot of companies have set up
Speaker 1: shop as well, trying to tackle the Asian market. And
Speaker 1: then at the end of this year, Europe is set
Speaker 1: to fully implement its next stage of the crypto rules.
Speaker 1: There the market's in crypto assets regulation and with that
Speaker 1: set to come into force, it's pretty wide ranging. Companies
Speaker 1: are all thinking about what we should set up an
Speaker 1: entity in Europe too, because then we can tackle that
Speaker 1: market as well. The main thing that companies say that
Speaker 1: they want is regulatory clarity, and with all of those
Speaker 1: jurisdictions offering it right now and have been for about
Speaker 1: a year, they are still miles ahead of what the
Speaker 1: US wants to be. However, the US is still the
Speaker 1: biggest market in the world, right, so it can afford
Speaker 1: to wait a little bit.
Speaker 2: Is this rally just about Trump or are there other
Speaker 2: factors at play that are pushing bitcoin and other crypto
Speaker 2: assets so much higher.
Speaker 1: I'd say it's largely about Trump, but in kind of
Speaker 1: different ways. Right. So, there's the policies that he's promised
Speaker 1: to implement. Those are all positive things, but there's also
Speaker 1: the idea that bitcoin is a risk on asset. It's
Speaker 1: a way to hedge against inflation, if that's a view
Speaker 1: that you share. And so a lot of institutions that
Speaker 1: will have sat on the sidelines over the last few
Speaker 1: months of the campaigns when it was next connect between
Speaker 1: Trump and Kamala Harris, they will now be thinking, Okay,
Speaker 1: it's now safe for us to get back into bitcoin.
Speaker 1: It's now safe for us to look at that. We've
Speaker 1: seen a lot of divergence, for example, between the price
Speaker 1: of bitcoin and the price of gold. Bitcoin has become
Speaker 1: much more popular recently over gold, and gold was traditionally
Speaker 1: one of those safe haven assets. Because of that, there's
Speaker 1: also a guess a general institutional swing into the asset
Speaker 1: class that comes somewhat because of Trump, but also because
Speaker 1: it's an asset like any other, and it's somewhere that
Speaker 1: they can now buy into again.
Speaker 2: Okay, Emily, thank you very much. That's our crypto reporter,
Speaker 2: emmely Nicole. For more explanations like this from our team
Speaker 2: of twenty seven hundred journalists and analysts around the world,
Speaker 2: search for Quick Take on the Bloomberg website or Bloomberg
Speaker 2: Business app. I'm Stephen Carroll. This is here's why. I'll
Speaker 2: be back next week with more. Thanks for listening.