The trick with the US national debt and the game of Musk. Why Bitcoin Soared in Price After Trump’s Election Victory

The price of Bitcoin hit a new all-time high of $93,265 on Wednesday and fell 3.3% on Thursday. At the time of writing on Friday, it was trading slightly higher at around $88,200.

A sharp rise in the market took place after the recent US presidential election, where Donald Trump won. The election result added even more anticipation for potential US policy changes favorable to cryptocurrencies.

NV Business selected the main facts that caused the sharp rise of the cryptocurrency market after Trump’s victory.

Elon Musk’s game

On a wave of optimism, Bitcoin has surged 20% in just one week, pushing the overall cryptocurrency market past the $3 trillion mark for the first time since 2021. Meanwhile, Dogecoin, a cryptocurrency that Elon Musk has always supported, has also surged to levels reminiscent of the 2021 crypto boom. Musk is known to support Trump and is a member of his team.

On that spurt, Musk expressed his support for the inflationary design (the ability to issue an unlimited number of cryptocurrency tokens) Dogecoin. Responding to Dogecoin co-creator Billy Marcus, Musk reaffirmed his faith in the system. “I believe Dogecoin’s flat inflation, meaning lower percentage inflation, is a feature, not a bug,” Musk wrote on his X social network.

Originally created from Bitcoin code, Dogecoin stands out for its unlimited supply, which differs from Bitcoin’s cap of 21 million coins. This characteristic has long been a matter of debate, with some advocating inflation as an instrument of ease of use and circulation.

Musk’s statements came amid increasing speculation that one of the world’s largest investment funds, BlackRock, is preparing to double its investment in bitcoins. This will speak to potential changes in how major financial institutions interact with cryptocurrencies.

Musk’s famous companies Tesla and SpaceX already accept Dogecoin for certain transactions, showing his commitment to the meme-driven cryptocurrency. However, this public endorsement was not without its problems. Musk has faced lawsuits after his past comments about cryptocurrencies were seen as market manipulation. Earlier this year, a judge dismissed a high-profile lawsuit that accused Musk and Tesla of artificially inflating the value of Dogecoin in a so-called $258 billion pyramid scheme.

Bitcoin can be made a reserve currency in the world’s largest financial market

Why did Trump’s arrival cause the market to be bullish? The Trump administration has hinted at major changes in cryptocurrency regulations. Experts are now predicting softer approaches and potential leadership changes at regulators known for their cautious stance on digital assets. Adding fuel to the speculative fire, Trump floated the idea of ​​a U.S. bitcoin reserve, comparing it to gold and suggesting that bitcoin could become an asset into which a colossal debt could be transferred. countries Probably, the migration of the national debt to the national currency will allow to control its value.

And President-elect Trump’s proposal to create a national bitcoin reserve is already gaining traction across the country. Several states are now weighing plans to create their own cryptocurrency reserves.

Thus, Trump’s return to the White House prompted Pennsylvania to introduce legislation that would allow the state treasury to keep the world’s largest digital asset on its balance sheet. Republican Sen. Cynthia Lummis of Wyoming hopes to push her own national bitcoin reservation bill within the first 100 days of Trump’s presidency.

The new draft law entitled “The Pennsylvania Strategic Bitcoin Reserve Act,” introduced by the Pennsylvania House of Representatives this Thursday, is the first of its kind. It would allow the Treasury to invest up to 10% of its roughly $7 billion in bitcoins as a way to help fight inflation and diversify its investments beyond traditional assets such as bonds and cash reserves.

The Strategic Reserves Act is the second crypto-related piece of legislation to be introduced in the state legislature this year. Last month, the state House passed a bill to protect the rights of citizens to self-storage digital assets and ensure their ability to use bitcoins as a payment method.

The advocacy group that helped Pennsylvania lawmakers draft the bill, the Satoshi Action Fund, is also behind the new strategic reserve bill. The main goal of the group is to promote the integration of bitcoins at the state level. Dennis Porter, founder of the lobbying group, believes Pennsylvania’s strategic reserve law will serve as a model for other states looking to integrate digital assets into their investment portfolios.

If passed, the bill would make Pennsylvania the first state to hold bitcoin directly on its balance sheet. And this will be the first step in what could be a transition to digital assets playing a greater role in the economic strategy of state governments.

Traders are also betting that bitcoin could hit six figures by the end of the year, according to data from Deribit exchange cited by Bloomberg. Predictions that bitcoin will surpass $100,000 are also gaining momentum on Wall Street, with Standard Chartered forecasting that the cryptocurrency could hit $125,000 by the end of the year, the firm said in a September note.

Meanwhile, Billy Marcus, the founder of the meme cryptocurrency Dogecoin, shared a sarcastic take on those who might be expecting Bitcoin to skyrocket to $1 million in no time. He pointed out that all cryptocurrency is nothing but a scam: “Why is bitcoin not a million dollars, I have been waiting for 2 days. Crypto is a scam!”