| More Articles | Free Reports | Premium Services Bitcoin has been ripping higher since the election. So have many “altcoins” – coins other than Bitcoin. For instance, Dogecoin, the crypto favored by Elon Musk, has more than doubled since the eve of the election. If you’re like most folks, you probably know Bitcoin is a “Trump trade.” But you may not know why. So, let’s talk about that. Why is Trump’s return to the White House good for Bitcoin and other cryptocurrencies? And how far do they have to run? As we’ll look at today, there are two important reasons why investors are piling into crypto on news of Trump’s victory. The first is a more crypto-friendly regulatory environment. The second is the prospect of Trump making Bitcoin an official reserve of the U.S. government, alongside gold. The first reason is a big deal. The second would be monumental if it comes to pass. If that happens, the buying pressure could easily send Bitcoin’s price to $500,000 or more. Addition by Subtraction To start – and I can’t emphasize this enough – it’s addition by subtraction. President Joe Biden’s Securities and Exchange Commission (SEC) has been hostile to cryptocurrency. It’s slow-rolled regulatory approval at every turn. It took a decade to get the first “spot” Bitcoin exchange-traded fund (ETF) approved. (A spot ETF directly holds bitcoin, like a gold ETF holds gold.) But that means that we can’t lay all the blame at the feet of Biden and his SEC chairman, Gary Gensler. The Obama administration and first Trump administration were slow to the party as well. Still, Gensler should have had this figured out years before he did. Also, it’s not clear that the SEC ever had jurisdiction over crypto to begin with. The SEC, as its name suggests, regulates securities. A security is a financial instrument that represents an ownership position in a corporation (like stocks), a creditor relationship with a governmental or corporate entity (like bonds), or rights to ownership as represented by an option. Bitcoin more closely resembles a currency or commodity than a security. And the SEC doesn’t regulate those. But Congress has had precious little to say on the matter. So, the SEC jumped in to fill the regulatory void. It’s not just the SEC. The Biden administration also made it hard for crypto companies to open or maintain bank accounts and link up with the financial system. Ostensibly, this was to fight financial fraud. But the result was to disincentivize innovation. With Republicans controlling both houses of Congress, and Trump calling the shots from the White House, we’re likely to get clarity for the first time on how – or if! – crypto is regulated. I fully expect the Democrats to push back on a lot of Trump’s agenda – that’s just politics. But they have no incentive to stymie crypto reform. Crypto is popular with Democratic voters, too. That would be a weird hill to die on. So, that’s the first factor pushing crypto higher – the prospect of friendlier regulation. The second factor has to do with its evolution as an asset class. Digital Gold Bitcoin was born in the 2008 financial crisis and started out as a hobby for libertarian techies and anarchists. It was a way for them to take control of their money and thumb their noses at the political and banking establishment that had just recently blown up the financial world. Individuals drove the first wave of crypto price rises. Then it went corporate. In August 2020, MicroStrategy CEO Michael Saylor converted $250 million of his company’s cash balance into bitcoin. Why? He was worried about dollar devaluation and inflation. As we talk about all the time in these pages, Bitcoin is “digital gold” and, as such, is resistant to inflation. And Saylor didn’t stop there. Today, the tech company owns $9.91 billion worth of bitcoin. Elon Musk was an early mover as well. In February 2021, he bought $1.5 billion of bitcoin to diversify Tesla's cash reserves. We’re now moving to the final stage. Bitcoin – the ultimate anti-establishment currency – is becoming a government asset. In September 2021, El Salvador became the first nation to adopt Bitcoin as legal tender, integrating it into its financial system alongside the U.S. dollar. To support this policy, the government began buying bitcoin as part of its national reserves. By May 2024, El Salvador held about 5,750 bitcoins, valued at around $354 million at that time. The country also invested in Bitcoin mining operations, using geothermal energy from the Tecapa volcano to mine about 474 bitcoins over three years. That’s more than $42 million worth at today’s price. Now, Trump is looking at creating a strategic Bitcoin reserve for the U.S. Crypto Capital of the Planet In July, Republican senator Cynthia Lummis introduced the Boosting Innovation, Technology, and Competitiveness through Optimized Investment Nationwide (BITCOIN) Act. It calls for the U.S. government to buy 1 million bitcoins over five years as a strategic Bitcoin reserve. This would help reduce the near-$36 trillion national debt. And that same month, at a keynote address at a Bitcoin conference in Nashville, Tennessee, Trump promised to make the U.S. the “crypto capital of the planet.” He also said he’d create a Bitcoin strategic reserve using the bitcoin that the government holds. It’s not widely talked about. But the U.S. government holds 212,847 bitcoins, valued at about $15 billion. These are primarily from seizures related to criminal activities, such as the Silk Road marketplace and the Bitfinex hack. Could Team Trump expand these holdings to make Bitcoin a major reserve asset alongside gold? Absolutely. He said he wants Uncle Sam to be the world’s largest holder of bitcoins… and that he wants to see more of it mined here. It would be ironic if Bitcoin – which was created to give people an alternative to government-controlled fiat currencies – ends up sitting on the government’s balance sheet supporting the value of the dollar. It would also be rocket fuel for the Bitcoin price. There May Be Trouble Ahead To sum up, the enthusiasm for cryptocurrencies under the new Trump administration comes down to two primary drivers... Trump will remove barriers to progress, such as excessive regulation. Trump may legitimize Bitcoin as a central bank reserve asset like gold. There’s also a third, unsaid driver: The dollar is a major accident waiting to happen. And for all of Trump’s bravado about fixing everything broken in government, he has no answer to the $36 trillion debt problem – a problem he contributed to in his first term with the largest budget deficits in history. If Trump fulfills his campaign promises to lower taxes without also massively lowering spending, the dollar could be headed for real trouble. Then there’s inflation. The Fed never really finished the job of tackling inflation. It started cutting rates before inflation was fully contained. And inflation may come roaring back if Trump pushes through his tariff hikes (which will be passed on to consumers) and deportation plans (which will mean less cheap labor and higher wage costs.) Protection against inflation and dollar devaluation was the primary reason I recommended Bitcoin in Freeport Investor when we launched this service in December 2023. And so far, that’s worked out according to plan. Subscribers who acted on this recommendation are up 110%. And Trump or no Trump, my view hasn’t changed. Bitcoin is one of the best ways to protect yourself from the three Ds – debt, deficits, and dollar devaluation. If you haven’t already, now is a good time to buy. To life, liberty and the pursuit of wealth, | 