Bitcoin prices surged more than 40%, drawing global market attention as US President-elect Donald Trump endorsed digital currencies and picked several like-minded cabinet members.
Bitcoin recently surpassed $100,000 for the first time, a milestone in the history of digital currency.
Bitcoin has surged more than 40% in the past month, drawing global market attention as US President-elect Donald Trump endorsed digital currencies and picked several like-minded cabinet members.
Bitcoin’s surge reflects a shift in U.S. political and financial dynamics. The trajectory of policies under the incoming Trump administration could profoundly affect the balance between regulation and speculative capital that will shape the future of the U.S. economy.
Trump's shift in stance on digital currencies shows the growing influence of capital flows related to these currencies.
In 2019, Mr. Trump criticized digital currencies as “highly volatile” and conducive to illegal activities. However, in 2024, he announced plans to make the United States a global bitcoin superpower.
Trump’s cabinet picks reflect this shift, with his selection of Paul Atkins, a cryptocurrency advocate, to head the Securities and Exchange Commission further fueling bitcoin’s rally.
A Pew Research Center report found that 17% of Americans have invested in, traded, or used bitcoin or other digital currencies, rising to 23% among upper-income groups and 41% among adults under 30.
However, despite the growing appeal of bitcoin, skepticism remains.
Economists like Cornell University professor of international trade policy Eswar Prasad argue that bitcoin's volatile value makes it a vehicle more suitable for speculation than trading.
Many Americans remain wary of the safety of digital currencies, with a Pew survey finding that just 5% expressed strong confidence in the currency's reliability.
On the one hand, bitcoin’s volatility makes it susceptible to manipulation by large-cap investors. With limited liquidity and utility, bitcoin is highly susceptible to market sentiment, regulatory changes, cyberattacks, and speculative trading.
On the other hand, years of loose US monetary policy have fueled inflation, eroding Americans' purchasing power and prompting them to seek riskier assets.
The risk of a speculative bubble in digital currencies is not new. In 2023, cryptocurrency-related scams in the US caused more than $5.6 billion in losses, up 45% from the previous year.
Analysts warn that as the world's largest economy and a major player in the global financial system, the US must adopt responsible financial regulations, otherwise it could harm both US investors and the global economy as a whole./.
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