Trump Administration: Impact on Cryptocurrency Markets

The cryptocurrency markets reacted cautiously to Donald Trump’s initial actions regarding digital assets. Following the announcement of his regulatory approach, cryptocurrencies experienced slight gains. Notably, the smaller cryptocurrency, ether (ETH), saw an increase of 5 percent, reaching $3,420 during the Asian trading hours.

Market Stability

Since Donald Trump assumed office on January 20, Bitcoin (BTC) has maintained a relatively stable position, trading at approximately $105,000 as of January 24, after previously surging 50 percent post-election. This increase was largely attributed to Trump's promise of a substantial bitcoin reserve and a favorable stance towards cryptocurrency regulation.

In addition to Bitcoin, ether also demonstrated stability throughout the week, reflecting a broader market sentiment during Trump's early policy rollouts.

Executive Order and Regulatory Environment

On January 23, Trump signed an executive order creating a digital assets working group. This move provided some comfort to crypto enthusiasts who were disappointed that cryptocurrency reform was not included in his initial policy announcements. However, the executive order lacked specific details. Titled ‘Strengthening American Leadership in Digital Financial Technology,’ it aimed to protect banking services for crypto companies and prohibited the creation of a US central bank digital currency, though it remained vague on further regulatory measures.

The working group was tasked with submitting a report by July that would recommend regulatory changes and explore the feasibility of a national digital asset reserve.

Market analysts noted that while some profit-taking was occurring amidst the uncertainty surrounding Trump's administration, he had not entirely backed away from his promises. However, they pointed out that significant changes might not materialize as quickly as some market participants had hoped.

Revocation of Previous Orders

Trump's recent executive order also reversed a 2022 directive from President Joe Biden, which had encouraged regulatory bodies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission to provide guidance for managing risks within the crypto ecosystem.

On the same day, the SEC rescinded certain accounting guidelines that had made it costly for companies to hold crypto assets on behalf of others—an issue that had been a focal point for advocates within the industry.

A week prior, crypto executives celebrated the Trump administration's arrival at a well-attended black-tie event. However, some experts expressed concerns over potential conflicts of interest regarding Trump-linked cryptocurrency ventures, including a meme coin named $TRUMP.

Analysts suggested that for cryptocurrency prices to increase further, clear and supportive policy initiatives from the administration, such as an executive order regarding a bitcoin reserve or reduced regulations, would be necessary.

Trump, Cryptocurrency, Bitcoin