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Since Donald Trump’s reelection, Bitcoin has surged to its highest value ever, surpassing $89k per coin on Tuesday. It’s a trend playing out across cryptocurrency, an industry that could benefit from deregulation under President Trump.
On today’s Big Take podcast, Bloomberg’s stacy-marie ishmael and David Gura break down whether the recent “melt up” in crypto prices is part another of boom-bust cycle or if the US’s first crypto-friendly president is likely to usher in a new era in digital assets.
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Here is a lightly edited transcript of the conversation:
David Gura: This week, Bitcoin hit at all-time high.
stacy-marie ishmael: I think the scientific term is a melt up, which is to say if there is a record that can be broken, the prices are beating the records.
Gura: stacy-marie ishmael oversees Bloomberg’s coverage of crypto, and she says … Bitcoin and other crypto assets have been on a tear.
ishmael: We've also seen this in some things that are called altcoins i.e. alternatives that are not Bitcoin with names like Dogecoin, Solana, and even the second largest crypto, Ethereum.
Gura: So what explains the so-called melt up? stacy-marie says the 2024 election — even beyond Donald Trump’s win — has meant not just good things for crypto prices, but also, for the crypto industry more broadly. And it wasn’t by accident. Companies and trade groups spent more than $130 million on crypto-friendly candidates this cycle. And stacy-marie says, that paid off.
ishmael: They mostly won, right? This was one of the highest ROI bets that the digital asset industry has placed, and they've had some very big successes.
Gura: It’s a turning point for how much influence the crypto industry has in Washington.
ishmael: Various folks, including Brian Armstrong, the CEO of Coinbase, have made it clear that this was not their last election, right? They're going to be around for the foreseeable future. And they intend to continue to play a significant role in trying to shape whatever the future holds for the industry.
Gura: I’m David Gura, and this is The Big Take, from Bloomberg News. Today on the show: Bitcoin prices are surging. But we’ve seen this before. What may be different this time around, and is the US presidential election ushering in a new era in crypto?
Gura: Crypto prices started to climb in the run-up to the US presidential election, but they really took off when it became clear who won. I asked Bloomberg's stacy-marie ishmael what's driving these gains.
ishmael: There are a few different ways to answer that question. I would say one, there is a bit of narrative, which is nothing can stop us now. We have the crypto-friendliest president that has ever been in the US, or at least president-elect. We have the promise from said president-elect that he will fire Crypto's biggest enemy, or who's perceived as crypto's biggest enemy, Gary Gensler, who's the current chair of the US Securities and Exchange Commission. We have a number of people in Congress, or recently elected into Congress, who have been perceived as much crypto-friendlier than people in other positions. You know, Bernie Moreno in Ohio, who defeated Sherrod Brown, is himself a blockchain and crypto entrepreneur. That's like a big get, or perceived as a big get.
Gura: stacy-marie says public perception of the market is in a very different place from where it was four years ago, when Joe Biden was elected.
ishmael: It was really around the time that Coinbase went public, that FTX started gaining traction, that, you know, non fungible tokens remember Bored Apes, you know, started to become popular with various celebrities, which to be clear was a very, like, very clever influence campaign that was, you know, a lot of bought and paid for marketing. But that so-called “Crypto Superbowl,” when you had ads for Coinbase, etc., was both, like, the first time that a lot of people who had never before encountered Bitcoin in the wild did so and also kind of the top of that particular cycle.
Gura: Crypto hit record highs. And then came the fall.
ishmael: In the months after that, you had FTX filing for bankruptcy, like, just around two years ago. You had, you know, not long after, Binance being fined $4 billion by the Department of Justice. You had multiple people going to jail.
Gura: FTX’s bankruptcy happened as the Biden administration was taking a more aggressive tack toward crypto, and those prosecutions exemplified a harder line from law enforcement.
Ishmael: So, I think that the Biden administration was in some ways reacting to this, this hype, this froth, this enthusiasm. And a lot of the criticism that they received initially was that they had taken too long to start regulating this, this market. And that's where this kind of phrase, regulation by enforcement, started to become popular in crypto. They were like, well, what you should have done is given us legislation that we can follow. But instead you're like, y'all are breaking rules. And here's what's going to happen as a consequence. But I wouldn't say that the other narrative that the Biden administration was overwhelmingly hostile to crypto was necessarily true either, because, you know, that administration, the Biden White House, was the one that said to every single major federal agency, Hey, study this thing, figure it out, what's going on. We want to understand this.
Gura: A big moment for crypto was in January, when the SEC approved spot Bitcoin ETFs. Regulators had rejected applications from asset managers for those exchange-traded funds before; so, this wasn’t something that happened overnight. And stacy-marie says that decision laid the groundwork for what we’re seeing today:
ishmael: One thing I would note about the SEC approval, it was that the statement that accompanied it was the most, like, grudging, here you go, I guess, but we're only giving you this because the courts told us we have to type thing, which I think is very reflective of a couple of views that Gensler and others have expressed over time, which is their perception is that these are high-risk, highly volatile assets, that should really only be part of portfolios run by people who have either a tremendous amount of experience or an extremely high ability to recover from everything going to zero.
Gura: stacy-marie says that the SEC's decision, grudging as it was, to allow spot Bitcoin ETFs, democratized crypto even more. It made Bitcoin appealing to people and institutions managing more conservative portfolios.
ishmael: You're starting to see different pension funds saying, hey, maybe it would be good if we have, you know, a little bit of exposure to this high beta, high risk part of the market. Yes, the risk of downturns are great, but so is the upside, if we can play that correctly.
Gura: And there's a belief that, under President Trump, the SEC may approve more investment products tied to other crypto currencies.
ishmael: You are starting to see people advocating for, you know, ETFs attached to other, even less well established tokens, like Solana, which is much newer. You're starting to see people say, well, okay. Maybe I don't want to buy an ETF, but is there another way for me to get exposure? And the answer is yes, absolutely. There are various publicly traded companies that are, say, Bitcoin miners. There is Coinbase, but there is also this supposed software services firm called MicroStrategy, which is really is a Bitcoin hedge fund and just in terms of the fact that it has such an enormous amount of Bitcoin on its balance sheets, and is therefore perceived as another way to get exposure to this asset class.
Gura: The president-elect says he wants to make crypto even more mainstream, and one way he’s proposed doing that is through a regulatory overhaul.
Donald Trump: On Day One, I will fire Gary Gensler and appoint a new SEC chairman.
Gura: A crypto-friendly candidate is heading to the White House. What is he likely to do to support crypto when he gets there? Are we on the cusp of a paradigm shift — or is the narrative getting ahead of the facts? That's next.
Gura: With Bitcoin’s price up more than 90% year-to-date, and crypto prices setting new records after Donald Trump’s reelection, I asked Bloomberg's stacy-marie ishmael if those gains are being fueled by vibes … or something more concrete:
Ishmael: I do think that in crypto, so much of this is tied up in, like, people's belief and optimism.
Gura: Vibes.
ishmael: It's an extremely vibes based asset class. And four years ago there were fewer positive fundamentals than there are now, but the vibes were just as strong if, you know, I don't think they were stronger, but they were at least just as strong.
Gura: And Donald Trump's reelection is feeding those vibes. Which is a little surprising, because of what he's said about crypto in the past.
Gura: So the bet here is that Donald Trump is going to be supportive of digital assets, including cryptocurrency. He's going to embrace it more. I'm old enough to remember when he called it a scam.
ishmael: Yes.
Gura: How much has his outlook on crypto evolved in just a few years?
ishmael: What I would say is that Donald Trump's original view of crypto was this is a scam and this is a threat to the US dollar. But we've seen explicit changes in at least his approach to monetizing crypto over time. So, you know, both Donald Trump and Melania Trump have issued their own non-fungible tokens. Trump at least has disclosed making several millions of dollars on, on selling those NFTs to fans and admirers. He has supported, at least in name, a project run largely by his sons called World Liberty Financial. Still unclear exactly what that's going to turn out to be, but it is. You know, it's got all of the trappings of what's called a decentralized financial product. There's a token associated with it. They've had multiple spaces on X. There's a lot of people who have some experience in digital assets who are working on.
Gura: He tweets about it. He posts about it.
Ishmael: He Truths it, you know, it's like, it's part of Trump Inc. at this point. And then you have the fact, as anybody in crypto will tell you. That the crypto constituency became a really meaningful source of donations and fundraising during the electoral campaign. And so, you know, he famously appeared at the big Bitcoin conference in Nashville this year. That's where he said, you know, he wants to make the US the crypto capital of the world.
Gura: What has he promised he'll do aside from being supportive of it? I know he's raised the specter of a strategic Bitcoin—
ishmael: —reserve
Gura: —reserve or stockpile. What concrete things has he presented as crypto related initiatives he would support?
ishmael: Gonna fire Gary Gensler. Going to make it easier for, Bitcoin miners, and that, if you don't know, are, you know, think of them like really, really big, powerful computers solving problems all day long. And when you have really big, powerful computers, what do you need? Energy. And so a big part of his promise to, like, you know, the Bitcoin mining industry is: we are going to give you lots of cheap energy, and you're not going to have to worry about those pesky environmentalists saying things like why are you polluting my water or whatever that might be, which is a very powerful message to people who, in some cases, you know, left the US because they thought that energy prices were too high. or they couldn't get around certain environmental regulations. And then, as you mentioned, you have this strategic Bitcoin reserve, which, right now, not particularly well fleshed out. But the idea is that the US would have, much like it has, you know, oil reserves or wheat or vaccines would have a stockpile of Bitcoin that it could decide to deploy strategically if ever it were called upon to do so. So, like, what does it mean in practice to be crypto friendly? Does that mean come January? Any existing or outstanding lawsuits filed by the SEC or other, you know, agencies would go away. Does it mean that Congress will be much more in favor of passing certain types of legislation that do provide the, you know, the phrase the crypto industry likes to use is regulatory clarity about what is and is not a security, who will regulate it, how will they regulate it. Does it mean that banks will have less onerous capital requirements on things to do with digital assets? I mean, there's a slew of different ways that you could foreseeably have a so-called crypto-friendly administration, but we have none of those details because none of the people who will make those decisions are yet in place.
Gura: So, it’s about how the regulatory landscape stands to change, but also, what the attitude toward crypto is in congress.
Gura: What does it mean for the crypto industry to have more friends in Congress? What does that lead to? Or would they like to see that lead to?
ishmael: Crypto has a notoriously short attention span, and I think in previous years, there was this idea of we gave you money, it's two days later, why has nothing happened yet? And what I think has to evolve and is evolving and this, you know, campaign cycle has shown is you now have more people on the crypto end with a more sophisticated understanding of how business gets done in DC and how long a game you have to be playing and what you have to be, you know, advocating for in addition to the things that you might want immediately and where those concessions have to be, and we're certainly going to see that in the hiring, right? I suspect that one of the areas of, you know, job listing profusion will be in people who know how to negotiate with lawmakers and their staffs.
Gura: You have lived through crypto booms and busts before—
ishmael: Mm hmm.
Gura: —these many cycles. Does this one feel different to you in any way?
ishmael: I think it's certainly the first one in which you have a government that's not, like, El Salvador, that is specifically saying, “This is going to be a part of our policy in one way or another,” right? Like this is the first major — sorry to emerging markets — but this is like the first major sovereign test of what does it mean to have, you know, kind of an administration come in partly on the back of saying digital assets are something that we're going to take really seriously, and not just digital assets in the form of like a central bank-backed digital currency or stable coins. Like we're really gonna go, you know, true believer and talk about Bitcoin a lot — and like they're, they're looking at this from a very different set of levels, not from like retail adoption, but like a systemic change to how the US government does business in a very broad way. And that will have consequences, whatever happens.
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