The recent success of Bitcoin is arguably an exaggerated version of what we have witnessed in the stock market. Prices are higher, but the outlook has genuinely improved.
In the case of Bitcoin, the outlook has improved dramatically. The U.S. is transitioning from a policy of hostility to digital assets to one that sees digital assets as a critical growth driver.
Trump and the MAGA movement have fully embraced cryptocurrency and blockchain technology as key elements of the American financial system of the future.
Trump’s choice for Treasury, Scott Bessent, has been a crypto advocate, while the next Commerce Secretary, Howard Lutnick, currently runs Cantor Fitzgerald, a Wall Street firm that has been very active in crypto and fintech. Lutnick has disclosed that he personally owns several hundred million dollars worth of Bitcoin.
Today, Trump named Paul Atkins, a lawyer who is a former SEC Commissioner and crypto industry champion, to replace Gary Gensler as Chair of the Securities and Exchange Commission. Gensler fought the Bitcoin ETF conversion in court and is widely viewed as the nemesis of the crypto industry. There are also rumors of a potential “crypto czar.”
Republican majorities in Congress are also important for the crypto industry as it increases the odds that we will see passage of favorable legislation. This includes the possible creation of a strategic Bitcoin reserve, as proposed by Sen. Cynthia Lummis of Wyoming.
There is also now a broad push underway to create a “digital assets framework,” which will facilitate the integration of new digital technologies and tools within the financial system. We are likely to hear much more about the “tokenization” of the capital markets in the years ahead as blockchain technology gets implemented.
We continue to view Bitcoin (and other digital currencies) as a promising emerging asset class that will continue to be highly volatile but potentially highly rewarding as digital assets become adopted and institutionalized in the U.S. and abroad. This could include meaningful purchases by governments around the world through central banks and sovereign wealth funds.
Bitcoin now has a much higher price tag than it did a few weeks ago, but the MAGA sweep represents an unmitigated positive. The change in the political landscape in 2024 represents a major step forward in what is likely to be a very long journey that has the potential to transform the technological underpinnings of the global financial system.
