Crypto Surges as Trump Win Sparks Bitcoin’s $87K Milestone

11 Nov at 6:07 pm

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Crypto Surges as Trump Win Sparks Bitcoin’s $87K Milestone \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Bitcoin surged to a new record high of $87,083 following Donald Trump’s election victory, driven by expectations of a “crypto-friendly” administration. Analysts attribute the rise to Trump’s pro-crypto stance and the success of new bitcoin investment vehicles, despite the risks associated with the volatile crypto market and ongoing environmental concerns around bitcoin mining.

Bitcoin Rally After Trump Victory Quick Looks

Record Bitcoin Price: Bitcoin surpassed $87,000, marking a 28% increase in just one week.
Pro-Crypto Trump Policies: Trump’s pro-crypto agenda includes plans for a national bitcoin reserve, promising industry-friendly regulations.
Spot Bitcoin ETF Influence: Recent approval and success of spot bitcoin ETFs have attracted massive investor inflows, supporting the rally.
Market Risks: Crypto’s history of rapid price swings, regulatory uncertainty, and environmental impact remain major concerns.

Deep Look

Bitcoin surged to a record high on Monday, topping $87,000 as investors poured into crypto markets following Donald Trump’s victory in the U.S. presidential election. This marked a dramatic 28% rise in bitcoin’s value within a week, reflecting widespread optimism among crypto enthusiasts and investors about Trump’s anticipated pro-crypto policies. Trump’s unexpected win has renewed hopes that the new administration will introduce favorable regulatory changes and clarity for the crypto industry, which has long been pushing for clearer guidelines.

As of 3:45 p.m. ET on Monday, bitcoin reached $87,083 according to CoinDesk, shattering previous records. This surge has been part of a broader rally across cryptocurrencies, as many investors anticipate that Trump’s presidency will bring a “crypto-friendly” approach to U.S. regulations, potentially creating a more accommodating environment for digital assets. Industry experts believe that Trump’s administration could provide leeway for the crypto industry by loosening current regulations and perhaps offering guidance that encourages industry growth.

Much of the momentum in the crypto space has come from Trump’s public shift on digital assets. Although Trump was initially a crypto skeptic, his stance evolved during the campaign, during which he pledged to position the United States as “the crypto capital of the planet” and create a national bitcoin reserve. Trump’s campaign embraced digital assets as he actively courted the crypto community, even accepting campaign donations in cryptocurrency and attending the high-profile Bitcoin Conference in July. In addition, he launched a new business venture, World Liberty Financial, focused on trading cryptocurrencies alongside family members.

The crypto community responded positively to Trump’s electoral win, given that he has previously promised to replace the current Securities and Exchange Commission (SEC) chair, Gary Gensler, who has taken a hard stance on regulating the crypto industry. Under Gensler’s leadership, the SEC pursued numerous enforcement actions and pushed for tighter crypto oversight, which many in the industry saw as stifling growth. Trump’s pro-crypto stance has therefore been viewed as a potential turning point, fueling investor enthusiasm and driving up prices.

Citi analysts David Glass and Alex Saunders noted that bitcoin and other cryptocurrencies surged in tandem with Trump’s favorable odds on election night. Their Friday research report explained that this sentiment largely stems from expectations of a regulatory shift that would back digital assets and possibly ease constraints that have previously hindered crypto expansion.

The recent rally also draws strength from the U.S. approval of spot bitcoin ETFs, which allow traditional investors to buy bitcoin through exchange-traded funds (ETFs) rather than directly on crypto exchanges. Spot bitcoin ETFs received regulatory approval in January and quickly became a popular investment option, providing a way for institutional and retail investors to engage with bitcoin. According to Citi’s research, these ETFs saw record-breaking inflows following the election, adding fuel to bitcoin’s upward climb. Glass and Saunders highlighted that spot ETFs are expected to continue driving bitcoin returns in the coming months.

Despite the optimism, crypto remains a volatile market with substantial risks. Cryptocurrency assets have a long history of sudden value changes, often overnight or during weekends when trading volume can be low. This volatility has proven both lucrative and risky for investors. Long-term performance of crypto assets, particularly bitcoin, depends heavily on broader market conditions and macroeconomic factors.

Over the past few years, bitcoin has seen wild price swings. At the start of the COVID-19 pandemic in 2020, bitcoin traded around $5,000, but it skyrocketed to nearly $69,000 in November 2021 as demand for tech-driven assets soared. However, bitcoin’s momentum faded as the Federal Reserve implemented aggressive rate hikes in 2022 to combat inflation, and the market suffered further losses when the collapse of crypto exchange FTX damaged investor confidence. At one point in early 2022, bitcoin’s price dropped below $17,000, reflecting broader industry struggles.

As inflation has begun to cool and the approval of spot bitcoin ETFs has spurred renewed interest, crypto prices have rebounded significantly, with bitcoin recently breaking records. Yet, financial advisors continue to stress caution, especially for everyday investors. Hargreaves Lansdown’s head of markets, Susannah Streeter, advised investors last week to only “dabble in crypto with money they can afford to lose,” given crypto’s unpredictable nature and history of dramatic swings.

Meanwhile, the environmental implications of bitcoin mining have drawn increasing scrutiny. Bitcoin is produced through a computational process known as mining, which requires vast amounts of energy, often derived from carbon-intensive sources like coal and natural gas. A recent report from the United Nations University and the journal Earth’s Future noted that bitcoin mining during 2020 and 2021 emitted carbon on a scale comparable to burning 84 billion pounds of coal or running 190 natural gas-fired power plants. About 45% of the energy for bitcoin mining came from coal, followed by natural gas (21%) and hydropower (16%).

In the United States, the Energy Information Administration (EIA) reported that crypto mining has grown rapidly, prompting some grid operators to raise concerns about its energy demand. The EIA’s preliminary data from February suggested that crypto mining could account for 0.6% to 2.3% of U.S. electricity consumption annually. While some mining operations have shifted toward renewable energy, the overall environmental footprint remains a point of contention, with regulators increasingly calling for climate-conscious practices in the industry.

As bitcoin and other cryptocurrencies navigate the promise and challenges of a changing regulatory landscape, the focus will be on whether Trump’s administration fulfills its pledge to support the crypto industry. With a combination of high investor enthusiasm and cautious regulatory interest, the crypto market is entering a new chapter that could shape its role in the global economy.