Bitcoin Approaches All Time High. What Happens If Trump Wins?

This article originally appeared on Forbes.com.

As the 2024 U.S. presidential election enters its final days, Donald Trump appears to be gaining ground. Although the final outcome is not assured, current trends suggest that if this trajectory continues, Trump will win.

At the same time, bitcoin's price has surged, recently crossing the $67,000 mark, a level not far from its all-time high of $73,750 reached seven months ago.

Given this price rise and bitcoin’s new status as a presidential campaign issue for both Trump and Kamala Harris, many are now asking: What impact would a second Trump presidency have on bitcoin policy and its price?

Trump and his close circle of advisors, including Robert F. Kennedy Jr., along with his sons Eric and Don Jr., have expressed an appreciation for the value of bitcoin, which is in sharp contrast to the current administration’s more skeptical stance.

Meanwhile, the bitcoin community largely views Trump's potential leadership as a boon for the industry, particularly due to his promise to remove Gary Gensler from his position as Securities and Exchange Commission (SEC) Chair.

Changes To Crypto Regulation Incoming?

Gensler has been widely criticized within both the bitcoin and broader crypto space for regulating through capricious enforcement action rather than proactive, principled rule making. Long suspected as having hitched his wagon to Elizabeth Warren’s Anti-Crypto Army in exchange for a coveted position in a Democratic administration, Gensler may question his political instincts in the face of a Harris loss.

This “regulation by enforcement” by the SEC has stifled innovation and capital investment in the crypto industry. (Side note: The “crypto industry” is just another word for a galaxy of startups and enterprises that are using new technologies to push financial technology forward.)

Crypto companies have been practically begging to be let into the front door of the U.S. compliance and regulatory regime, been rebuffed, and then faced expensive legal consequences for stepping over an invisible line. It is for this reason that the crypto industry has rallied around Trump – and why Harris has not been able to attract their support, having shied away from explicitly rejecting the Biden administration’s approach.

A change in leadership at the SEC could trigger a seismic shift for bitcoin's regulatory environment in the U.S., but the broader story is even more significant than that.

Recent investigative reporting by Nic Carter uncovered a targeted and possibly illegal effort by regulators in 2022 to shut down crypto-friendly banks. This so-called “Operation Chokepoint 2.0” initiative has been known for years, but its depths have only recently been discovered. Carter’s report revealed a coordinated plan to not only limit access to banking services by any company dealing with crypto, but also to intentionally bankrupt otherwise healthy banks that were willing to work with financial innovators.

Should Trump win and dismantle these behind-the-scenes efforts, it would dramatically change the landscape of fintech. Banks – keenly aware that their traditional business models are underperforming in today’s economy – already have a compelling incentive to embrace bitcoin. But they cannot make the leap until their compliance departments believe the regulatory posture of the U.S. government has permanently changed. There is little appetite for building new relationships with crypto firms if there’s a risk that the next administration would pull the rug out from under them.

However, a regulatory thawing in a Trump presidency would be likely to outlast his administration. Major public companies, pension funds, and institutional investors are already starting to add bitcoin to their balance sheets, both in physical form and through ETFs. The recent approval of spot Bitcoin ETF options will invite even more capital inflows and create a new layer of liquidity and price discovery in the market.

The Price Of Bitcoin Depends On Privacy And Self-Custody

What might all of this mean for bitcoin’s price? Increased liquidity and institutional adoption would likely stabilize some of bitcoin's notorious volatility, making it more attractive as a store of value for traditional investors. At the same time, bitcoin’s fixed supply, alongside a significant uptick in demand, could drive up its exchange rate with the dollar – with one important caveat.

Bitcoin is digital property, and it has physical existence. It is possible, and relatively straightforward, for business, individuals, and investment funds to keep physical bitcoin in their own custody.

However, increased demand for physical bitcoin is not quite the same as increased demand for exposure to bitcoin’s price, which can be achieved utilizing paper bitcoin.

If investors remain uneducated about the importance of self-custody, then any increase in demand will be met with an increase in the supply of paper bitcoin (also known as IOUs). This increase in supply would prevent the price of spot bitcoin from rising as high as it otherwise would.

Moreover, unless financial privacy becomes a priority for voters, one of the most significant capabilities of the Bitcoin Network – final settlement every 10 minutes – will be threatened.

If and when Operation Chokepoint 2.0 is dismantled and Elizabeth Warren’s Anti-Crypto Army fades into obscurity, the crypto community will face a pivotal moment. Leaders and developers must choose which projects will most effectively advance both the industry and humanity as a whole.

Their foremost priority should be to educate the public about the critical importance of self-custody and to deliver tools that empower individuals to secure their own assets.

Equally vital is the development of robust financial privacy technologies, the most important of which in the short term is Silent Payments.

Without financial privacy and self-custody within easy reach of every consumer, fostering bitcoin adoption could become indistinguishable from laying the groundwork for Central Bank Digital Currencies (CBDCs).

The convergence of political and financial forces seems to be setting the stage for a new phase of bitcoin’s journey, one that could see it firmly cemented as a central pillar of both U.S. monetary policy and global financial markets. What a Trump presidency would mean for bitcoin is not yet known, but if he follows through on his stated bitcoin policy, the price of $1,000,000 per bitcoin may not be as far off as it once seemed.