The last couple of months have been among the most exciting and noteworthy times in the short history of cryptocurrency. Whatever the implications for the wider world of the return of Donald Trump to the White House, it is an exciting time for crypto.
Several policy pledges made ahead of the election indicate that this will be the most pro-crypto administration to date. Bitcoin values have surged as a result. Among the policy promises that have led to this bull market has been the president-elect’s promise to remove Gary Gensler as head of the Securities and Exchange Commission (SEC).
Mr Gensler has favoured tougher regulation of crypto, in tune with the outgoing Biden administration and senior Democrats like Elizabeth Warren. Mr Trump wants to change that.
As he prepares to step down, Mr Gensler told Bloomberg that he thinks the SEC still has more work to do on regulation.
“I’ve never seen a field that’s so much wrapped up in sentiment and not so much about fundamentals,” he noted, arguing that to hold back from enforcement action against crypto firms seen to be flouting securities laws would be a retrograde step.
What A Post-Gensler Environment Will Look Like
During Mr Gensler’s time in post, the SEC brought over 100 enforcement actions, up by a fifth from his predecessor, Jay Clayton, who was in charge during the first Trump administration, a time when the president was less enthusiastic about crypto than he is now.
Under his successor, former SEC commissioner Paul Atkins, the number is expected to plunge. The announcement of Mr Atkins as the new SEC head saw Bitcoin rise further.
Another body that will be involved in dealing with regulatory issues is the Commodity Futures Trading Commission. This, too, is seeing change, with outgoing chair Rostin Benham set to step down along with Mr Gensler. Also like Mr Gensler, Mr Benham has fired a parting shot in a final speech calling for more regulation.
However, in line with the Trump administration’s new approach, this is unlikely, with low-regulation advocates like Summer Mersinger and Brian Quintenz being interviewed to take Mr Benham’s place.
For XRPayNet account holders, this is all worth reflecting on. There will be a lot of opportunities for cryptocurrency conversion transactions over the next few years, especially with the market set to be so lively. But could it be that a light-touch regulatory regime will bring greater risk?
Where Next For Bitcoin?
The biggest question will be what happens to Bitcoin. This has been at the centre of Trump’s pledges, including a Bitcoin reserve. The result has been a surge in value, peaking at $108,000. The question is, will it stay high, or is this a bubble that will burst?
Opinions vary. On the one hand, some argue this is a classic bubble, driven by a lot of excitement to the point where a market correction is inevitable and a crash will take place. As Forbes reports, renowned crypto trader Arthur Hayes has predicted the price will plunge in late March.
Similarly, an analysis by CryptoQuant has concluded that the current Bitcoin bull market will peak either in the first quarter or by the end of the second at the latest.
There have already been signs that there may at least be some peaks and troughs as a direct result of the very thing that has driven the recent bull market – the incoming administration – and in particular the new Department of Government Efficiency (DOGE).
Responding to a claim by CEO of Y Combinator Gary Tan that if DOGE is successful in reducing government spending this will push up the value of Dogecoin, Elon Musk, who is jointly heading the new non-governmental body, argued that, instead, success would cut dollar inflation and therefore make Bitcoin cheaper to buy in dollars.
For Mr Musk, the point was that “what matters is the ratio of dollars to crypto”.
More Firms Bet On Crypto
While some predict an end to the boom or a redefining of value in terms of ratios rather than headline price, others believe the boom is far from at an end.
As the New York Times has reported, more companies than ever are “betting on Bitcoin”, showing that these firms are willing to embrace the potential risk this involves for the potential rewards on offer.
Of course, some may see that as a long-term investment that anticipated the currency riding out a dip in prices at some point, followed by another upsurge that raises its value to a new record high. Perhaps the market has already peaked. What is certain is that for investors looking to trade in crypto, these are very interesting times with a lot to keep an eye on.