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Bitcoin (BTC-USD) is experiencing a significant surge, driven by a newfound wave of political support as former President Donald Trump prepares to address a bitcoin conference in Nashville this week. The price of bitcoin has risen by more than 13% over the past month, surpassing $68,000 in the last 24 hours and nearing its all-time high set earlier this year.
Anticipated Regulatory Approvals
Crypto investors are eagerly anticipating several developments, including the potential approval of exchange-traded funds holding ether (ETH-USD), the world’s second-largest cryptocurrency, by the Securities and Exchange Commission. These ETFs could make ether a viable asset for 401(k)s, IRAs, and pension plans, thereby enhancing its mainstream acceptance. Many money managers, already invested in bitcoin ETFs, are now poised to expand their portfolios to include ether.
Trump’s Endorsement and Political Climate
The highlight for the crypto community this week is Trump’s upcoming speech at the Bitcoin 2024 conference in Nashville. Trump’s endorsement is seen as a significant boost for the industry, with many expecting a more favorable regulatory approach from Washington, D.C., should he return to office in 2025.
Previously critical of bitcoin, Trump has recently softened his stance, referring to cryptocurrencies as “amazing” in a Bloomberg interview. This shift signals a potential alignment with many in the Republican Party who have criticized the Biden administration’s stringent regulations on the crypto industry following the market downturn in 2022.
Market Analysts’ Perspectives
Analysts believe that Trump’s economic policies could further support the rise of digital assets. Ian Katz, a managing director of Capital Alpha Partners, told Yahoo Finance, “It’s more likely that a Trump administration would be more friendly to crypto than the Democrats have been.” Bernstein analyst Gautam Chhugani echoed this sentiment, noting significant growth potential as institutional investors increase their allocation to crypto assets.
Mark Cuban, owner of the Dallas Mavericks and a prominent entrepreneur, suggested that Trump’s policies, such as lower tax rates and tariffs, could be inflationary and drive up the price of bitcoin. “What will drive the price of BTC is lower tax rates and tariffs, which if history is any guide (and it’s not always), will be inflationary,” Cuban said on X.
Bitcoin’s Strong Performance in 2024
Bitcoin has surged over 50% in 2024, fueled by several favorable developments. Expectations of lower interest rates from the Federal Reserve and growing public acceptance of digital assets by prominent Wall Street figures have contributed to this rise. Larry Fink, CEO of BlackRock (NYSE:BLK), recently referred to bitcoin as a “legitimate financial instrument” and a “hedge for optimism” in a CNBC interview, further boosting confidence in the cryptocurrency.
BlackRock’s iShares bitcoin ETF, approved in January, saw $18 billion in net inflows in its first six months, underscoring the growing institutional interest. The firm is also expected to receive SEC approval for the first U.S.-regulated ether ETFs, marking another significant milestone for the crypto industry.
Bitcoin as a Safe Haven Asset
Originally created in the aftermath of the 2008 financial crisis, bitcoin has been viewed by some as digital gold or a safe haven store of value. Despite its recent correlation with volatile technology stocks, bitcoin has historically attracted investors during significant geopolitical events, such as the Russia-Ukraine war, when sanctions were imposed on Russia.
Market strategists, like Joel Kruger from LMAX, anticipate that bitcoin will regain its status as a safe haven asset once the Federal Reserve begins lowering interest rates, expected as early as September. “Bitcoin has not had the opportunity to really shine as a safe haven store value asset,” Kruger stated, predicting a market rotation triggered by changes in interest rates.
Conclusion
The recent surge in bitcoin’s value, bolstered by political support from Donald Trump and anticipated regulatory developments, underscores the growing influence of digital assets. As the 2024 election approaches, the potential for a more crypto-friendly regulatory environment could significantly impact the market, attracting both individual and institutional investors. Bitcoin’s continued rise and acceptance highlight its evolving role in the global financial landscape.
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