Bitcoin’s Future: What a Trump Presidency Could Mean for Crypto Investors

Following a strong post-election boost, Bitcoin (CRYPTO: BTC) surged nearly 40% in value, with many investors believing that pro-crypto sentiment around a Donald Trump presidency played a role. Although Bitcoin has since retreated from its near $100,000 peak, the outlook for cryptocurrency appears favorable as we approach 2025.

Looking ahead, how might a Trump presidency influence the crypto landscape? Will it uplift the entire crypto market or majorly favor Bitcoin?

New Regulatory Landscape on the Horizon

It’s anticipated that a Trump presidency will lead to a more favorable regulatory climate for cryptocurrencies. SEC Chair Gary Gensler, who many view as opposed to crypto, is set to exit on January 20.

By the end of 2025, we might witness significant legislation that updates the U.S. financial system to include cryptocurrencies. The U.S. House of Representatives has already passed the Financial Innovation and Technology for the 21st Century Act; what remains is the necessary political support to finalize it into law.

Image source: Getty Images.

This new legislation could lead to the establishment of the Commodity Futures trading Commission as the primary regulator for crypto, which would likely reduce the SEC’s authority in this area.

Cryptocurrencies that faced scrutiny from the SEC in the past two years might benefit greatly. In 2023, the SEC identified about 50 cryptocurrencies it considered possible securities, including Cardano (CRYPTO: ADA) and Solana (CRYPTO: SOL). If the regulatory pressure eases, these coins could see improved fortunes. Following the election, Robinhood Markets (NASDAQ: HOOD) relisted both for trading.

Could Bitcoin Become a National Treasure?

One intriguing prospect during a Trump administration is the establishment of a national Bitcoin reserve. Much like the strategic petroleum reserve, this Bitcoin reserve could assist during economic downturns and potentially help address the nation’s $35 trillion debt.

Such ideas aren’t solely theoretical. U.S. Senator Cynthia Lummis, R-Wyoming, has put forward the Bitcoin Act of 2024, which aims to create this reserve by committing the U.S. government to acquire 1 million Bitcoins over five years. This would represent 5% of the total circulating supply, positioning the U.S. as a leader in crypto, which aligns with Trump’s vision.

Interestingly, other countries are exploring similar initiatives. On November 25, Brazil announced plans for a sovereign strategic Bitcoin reserve equivalent to 5% of its international reserves, intended to stabilize the national currency and support trade.

Emergence of New Crypto Products

Investors can also expect the introduction of innovative financial products. The recent launch of spot Bitcoin ETFs signifies the beginning of greater product diversity for investors on Wall Street. With the ETF concept now established, participants can look forward to a variety of new investments, including ETFs focused on lesser-known cryptocurrencies.

Additionally, other nations offer financial products not yet available in the U.S. A popular example abroad is the perpetual futures contract. While Coinbase Global (NASDAQ: COIN) is currently unable to provide this service in the U.S. due to volatility concerns, it is accessible to international users. It’s conceivable that such products could eventually be introduced to American investors under a Trump administration.

Will Bitcoin Maintain Its Dominance?

Overall, these potential changes appear poised to benefit the crypto market, although their realization isn’t guaranteed. Bitcoin is likely to emerge as a primary beneficiary, given its positioning within Trump’s agenda and its prominence among institutional investors. If a strategic reserve is established, Bitcoin will likely be a symbol of the nation’s economic influence.

However, it’s important to remember Bitcoin’s cyclical nature, influenced by halving events every four years. Therefore, it’s likely that markets will face a downturn at some point within the next four years. Without regulatory constraints, a speculative surge in the crypto market could have negative consequences.

The resilience of Bitcoin throughout its 15-year history is noteworthy. Each market downturn has led to new record highs, suggesting that Bitcoin could reach unprecedented values by the end of Trump’s potential second term.

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Dominic Basulto holds positions in Bitcoin, Cardano, and Solana. The Motley Fool also has positions in and recommends Bitcoin, Cardano, Coinbase Global, and Solana. Please refer to our disclosure policy for more details.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.