Bitcoin's remarkable journey from Election Day to reaching new heights is a phenomenon that has captured the attention of investors and economists alike. The post-election run, fueled by the pro-crypto stance of the incoming Trump administration, has led to a significant increase in its value.

Unraveling the Crypto Revolution under the Trump Administration

Bitcoin's Post-Election Boom

On Election Day, bitcoin was worth $69,374 according to Coinbase. Within a month, it spiked more than 44 percent, reaching a milestone of over $100,000 for the first time. This surge wasn't isolated to bitcoin; other cryptocurrencies like ethereum and XRP also saw significant growth during this period. The sudden increase in value is a clear sign of investor optimism about President-elect Donald Trump's policies and those of his picks to head key regulatory agencies. Some of these nominees have explicitly promised deregulation of the crypto industry, which has triggered a flood of money into these markets.

As Ramaa Vasudevan, an economics professor at Colorado State University, pointed out, "That bitcoin hit the $100,000 mark reflects the expectation of both political support and regulatory latitude under the incoming administration." The nomination of crypto-enthusiasts for administrative posts has sent a strong signal of the embrace of bitcoin and crypto.

Trump's election may have sparked the initial rally, but the financial establishment's growing acceptance of bitcoin in recent months provided the necessary fuel. Once a niche curiosity, bitcoin is now a mainstream digital currency that everyday Americans can invest in through reputable retail investment accounts. This increased legitimacy has given bitcoin some staying power, even if it is still debated whether it is a bubble or a legitimate investment.

Trump's Crypto Support and Regulatory Choices

Throughout his presidential campaign, Trump has been a staunch supporter of cryptocurrencies. His choices to lead key government agencies related to crypto regulation reflect this enthusiasm. For example, the nomination of Paul Atkins to head the Securities and Exchange Commission (SEC) was a significant event. Atkins, who was previously an SEC commissioner during George W. Bush's administration, is seen as a pro-deregulation figure.

Molly White, a cryptocurrency researcher and critic, noted that "Atkins is fairly establishment; he has the SEC background, but he also was a very strong advocate for deregulation when he was in the SEC and certainly since then." Atkins is also a co-chair of the Chamber of Digital Commerce's Token Alliance, which advocates for lax regulation of cryptocurrencies.

Perianne Boring, the CEO of the Chamber of Digital Commerce, is rumored to be one of Trump's top picks to head the Commodity Futures Trading Commission (CFTC). Currently, cryptocurrency is under the purview of the SEC, but the Trump administration is considering regulating it as a commodity instead, which would bring it under the CFTC's jurisdiction. This change could have a significant impact on the regulatory landscape of cryptocurrencies.

Bitcoin's Establishment as a Digital Asset

Over the past five years, especially after the downfall of crypto trading platform FTX in 2022, the narrative around cryptocurrency's utility has shifted. It is now being promoted more as an investment instrument rather than a currency for daily transactions. This pivot has also contributed to its valuation.

In January, the SEC approved the first bitcoin exchange-traded funds (ETFs) in the US. ETFs provide indirect access to cryptocurrency, allowing investors to participate in the market without directly buying and storing bitcoin. Firms like BlackRock, Invesco, Fidelity, Grayscale, and Ark Invest have launched bitcoin funds, offering new investors easier ways to invest in cryptocurrency.

Previously, investors had limited options for trading bitcoin. They could buy it on an exchange but faced challenges in storing it safely. Now, ETFs offer an established and regulated option. However, as Swati Sharma, Vox Editor-in-Chief, mentioned, "While no one can predict the exact inflection point or when the price will stabilize, the long-term driver of bitcoin's rise is its evolution — not just as digital gold, but as a foundational layer of global financial infrastructure."

Despite the optimism, there are concerns. Vasudevan warned that there is still reason to believe that crypto's climb won't last forever. Bitcoin has surged before only to crash precipitously, as seen in November 2022 after the FTX collapse. The price of crypto is still based largely on speculation rather than inherent value.