WEBVTT - Here's Why Bitcoin Investors Love Trump's Win

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>I'm Stephen Carol and this is Here's Why, where we

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<v Speaker 2>take one news story and explain it in just a

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<v Speaker 2>few minutes with our experts here at Bloomberg. Hello, bitcoiners,

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<v Speaker 2>It's been a season of superlatives for crypto assets.

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<v Speaker 3>Just fifteen years. Bitcoin is gone from merely an idea

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<v Speaker 3>posted anonymously on an Internet message board to being the

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<v Speaker 3>ninth most valuable asset anywhere in the world. Can you

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<v Speaker 3>believe that?

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<v Speaker 1>Is that? Right?

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<v Speaker 3>And most people have no idea what the hell it is?

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<v Speaker 3>You know that right? So what happens when they figured

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<v Speaker 3>it out? That's going to really be something.

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<v Speaker 2>That was Donald Trump speaking to the Bitcoin Conference in

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<v Speaker 2>Nashville in July. In the days after the US presidential election,

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<v Speaker 2>the price of bitcoin swords to new records. Now, crypto

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<v Speaker 2>investors are used to seeing major volatility and prices, but

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<v Speaker 2>even by bitcoin standards, this was a blistering rally. Donald

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<v Speaker 2>Trump has promised more favorable rules for digital assets, a

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<v Speaker 2>sharp break from the approach taken under Joe Biden. So

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<v Speaker 2>here's why bitcoin investors love Trump's win. Our crypto reporter

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<v Speaker 2>emmely Nicole joins US now for more, Emily, can you

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<v Speaker 2>put the moves that we've seen in context for US

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<v Speaker 2>since the election, is a thirty percent move in one

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<v Speaker 2>week normal?

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<v Speaker 1>I wouldn't say it's normal anymore. It might have been

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<v Speaker 1>in the original you know, early days of crypto, when

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<v Speaker 1>ass were a lot more volatile, there was a lot

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<v Speaker 1>less quidity in the market. But these days bitcoin is

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<v Speaker 1>pretty firmly an institutional play. We have a lot of

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<v Speaker 1>institutional investors in the space now, especially since the debut

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<v Speaker 1>of US spot ETF tied to the cryptocurrency in January,

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<v Speaker 1>and so thirty percent is a pretty big hike.

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<v Speaker 2>What exactly is Donald Trump proposing that's got investors in

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<v Speaker 2>this space so excited overall?

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<v Speaker 1>His main mantras that he wants to make the US

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<v Speaker 1>the crypto capital of the planet. I think is the

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<v Speaker 1>wording he used back in the summer at one of

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<v Speaker 1>his campaign rallies. He has gone to bitcoin conferences in

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<v Speaker 1>the US. He has pledged to make it so that

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<v Speaker 1>all bitcoin's mind in future would be mined on US soil.

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<v Speaker 1>He wants to create a strategic reserve denominated in bitcoin,

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<v Speaker 1>and he wants to fire Gary Ganzer, the chair of

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<v Speaker 1>the Securities and Exchange Commission on day one in office,

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<v Speaker 1>because Genzer has been quite a regular enforcer against crypto

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<v Speaker 1>companies in recent years, which they view as stymying innovation

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<v Speaker 1>in the space.

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<v Speaker 2>I mean, that's a lot of changes. I mean, how

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<v Speaker 2>different would you characterize the approach of Donald Trump to

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<v Speaker 2>this compared to what the US is doing at the moment.

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<v Speaker 1>It's very different to the current status square. The Biden

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<v Speaker 1>administration has been largely hands off, floding, Gary Genzer and

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<v Speaker 1>the SEC do most of the work when it comes

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<v Speaker 1>to crypto. There has been an occasional intervention. Biden, for example,

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<v Speaker 1>vetoing a change to a bill earlier this year that

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<v Speaker 1>would have allowed banks to custody crypto assets more easily.

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<v Speaker 1>So there have been some intervention from the Biden administration,

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<v Speaker 1>and generally that administration has been viewed as not very

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<v Speaker 1>crypto friendly. So the reason why bitcoin is now up

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<v Speaker 1>so much is because Trump going into office means that

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<v Speaker 1>people are expecting another four years of bitcoin rallies, crypto innovation.

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<v Speaker 1>We're getting back to that twenty twenty one heyday where

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<v Speaker 1>assets were going crazy and everyone was buying NFTs, not

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<v Speaker 1>necessarily that you know, NFTs will be the next big thing,

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<v Speaker 1>but there would be something of that nature.

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<v Speaker 2>Yeah, I mean, are the proposals that we'd heard from

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<v Speaker 2>Donald Trump realistic. It's a sweeping set of changes.

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<v Speaker 1>Some of them are things that he can do right, Like,

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<v Speaker 1>you know, he can fire Gary Ganser if he wishes to.

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<v Speaker 1>He can appoint a new SEC chair that fits better

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<v Speaker 1>with the views he has. He can instruct the Treasury

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<v Speaker 1>to create a strategic reserve to nominate in bitcoin. But

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<v Speaker 1>things like asking for all future bitcoins to be denominated

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<v Speaker 1>on US soil, that's something that's incredibly hard to do.

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<v Speaker 1>There's nothing to stop somebody in the UK, Europe, Singapore,

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<v Speaker 1>anywhere else from setting up a computer to mind some bitcoin,

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<v Speaker 1>and that would go against his wishes. I think the

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<v Speaker 1>reason why he was making that a claim is that

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<v Speaker 1>a lot of the bitcoin mining equipment out there in

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<v Speaker 1>the world is manufactured and created by Chinese companies, which

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<v Speaker 1>is obviously a big thing that Donald Trump has issue with,

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<v Speaker 1>and so he is trying to pledge that, you know,

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<v Speaker 1>in part of making the US a crypto capital of

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<v Speaker 1>the planet, bitcoin should be mined on US soil with

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<v Speaker 1>US tech.

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<v Speaker 2>Who is the US competing with when it comes to

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<v Speaker 2>being the crypto capital of the planet. Are there other

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<v Speaker 2>places who are even more favorable to this sector?

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<v Speaker 1>Because of the last couple of years of enforcement actions

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<v Speaker 1>against companies on US soil, there has been a definite

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<v Speaker 1>flea from the US to other hubs where the rules

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<v Speaker 1>are perceived to be more friendly. The Middle East in particular,

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<v Speaker 1>has been making a major push on crypto over the

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<v Speaker 1>last couple of years, Dubai and Abu Dabi being those

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<v Speaker 1>two big hubs, so a lot of businesses now have

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<v Speaker 1>significant presences in those areas. Singapore has also been a

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<v Speaker 1>big area where a lot of companies have set up

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<v Speaker 1>shop as well, trying to tackle the Asian market. And

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<v Speaker 1>then at the end of this year, Europe is set

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<v Speaker 1>to fully implement its next stage of the crypto rules.

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<v Speaker 1>There the market's in crypto assets regulation and with that

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<v Speaker 1>set to come into force, it's pretty wide ranging. Companies

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<v Speaker 1>are all thinking about what we should set up an

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<v Speaker 1>entity in Europe too, because then we can tackle that

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<v Speaker 1>market as well. The main thing that companies say that

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<v Speaker 1>they want is regulatory clarity, and with all of those

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<v Speaker 1>jurisdictions offering it right now and have been for about

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<v Speaker 1>a year, they are still miles ahead of what the

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<v Speaker 1>US wants to be. However, the US is still the

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<v Speaker 1>biggest market in the world, right, so it can afford

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<v Speaker 1>to wait a little bit.

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<v Speaker 2>Is this rally just about Trump or are there other

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<v Speaker 2>factors at play that are pushing bitcoin and other crypto

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<v Speaker 2>assets so much higher.

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<v Speaker 1>I'd say it's largely about Trump, but in kind of

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<v Speaker 1>different ways. Right. So, there's the policies that he's promised

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<v Speaker 1>to implement. Those are all positive things, but there's also

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<v Speaker 1>the idea that bitcoin is a risk on asset. It's

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<v Speaker 1>a way to hedge against inflation, if that's a view

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<v Speaker 1>that you share. And so a lot of institutions that

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<v Speaker 1>will have sat on the sidelines over the last few

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<v Speaker 1>months of the campaigns when it was next connect between

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<v Speaker 1>Trump and Kamala Harris, they will now be thinking, Okay,

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<v Speaker 1>it's now safe for us to get back into bitcoin.

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<v Speaker 1>It's now safe for us to look at that. We've

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<v Speaker 1>seen a lot of divergence, for example, between the price

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<v Speaker 1>of bitcoin and the price of gold. Bitcoin has become

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<v Speaker 1>much more popular recently over gold, and gold was traditionally

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<v Speaker 1>one of those safe haven assets. Because of that, there's

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<v Speaker 1>also a guess a general institutional swing into the asset

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<v Speaker 1>class that comes somewhat because of Trump, but also because

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<v Speaker 1>it's an asset like any other, and it's somewhere that

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<v Speaker 1>they can now buy into again.

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<v Speaker 2>Okay, Emily, thank you very much. That's our crypto reporter,

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<v Speaker 2>emmely Nicole. For more explanations like this from our team

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<v Speaker 2>of twenty seven hundred journalists and analysts around the world,

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<v Speaker 2>search for Quick Take on the Bloomberg website or Bloomberg

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<v Speaker 2>Business app. I'm Stephen Carroll. This is here's why. I'll

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<v Speaker 2>be back next week with more. Thanks for listening.