Donald Trump on Bitcoin

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The ‘Trump Pump’ and BTC’s newfound utility as a political asset

Business

Jon Southurst
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Just as some people are “famous for being famous,” BTC is “valuable because it’s valuable.” BTC has made a surprise entry as an issue in the 2024 U.S. presidential election, thanks to its equally surprising new best friend, Donald Trump.

Trump, who remains ahead in most polls against Democratic candidates, both known and hypothetical, has boosted BTC market price and even the network hash rate over the past month by declaring BTC holders and miners of strategic importance to the United States. Is there real economic value in the “Trump Trade,” as some have called it, or is it just a “Trump Pump?”

At any other point in the past decade, it would’ve been unthinkable for a mainstream-party U.S. presidential candidate to make Crypto a major campaign issue. But Crypto and presidential elections aren’t what they used to be. Not only is the world sailing in uncharted waters, but someone tossed the compass overboard, and we’re not even sure if the stars at night are in the right place.

Why is BTC so bullish on Trump?

Trump’s surprise (to some) election victory in 2016 was met with a drop in share prices and a large uptick in BTC prices. This was despite Trump’s past lack of enthusiasm for blockchain assets, which he later clarified in 2019 as such:

He’s since changed his mind, to put it mildly. In 2024, he declared a newfound affection for Crypto, BTC miners, and the net worth of influential BTC whales. He held a meeting with representatives from Bitcoin Magazine in June, where he expressed views that BTC miners could help stabilize the U.S. energy grid supply. He later posted on the Truth Social network that BTC could be a “last defense against a CBDC,” that “it will help us be ENERGY DOMINANT,” and that all remaining BTC should be “MADE IN THE USA” (all-caps emphasis is his own).

His 2024 re-election campaign became the first in history to announce it would accept BTC donations via the Lightning Network. He has stated an intention to support “crypto” holders’ right to self-custody their assets and has referred to the voting-bloc power of BTC’s 50 million U.S.-based holders.

Trump is also giving BTC fans a chance to put their money where their mouths are. He’ll speak on the main stage at the Bitcoin Conference 2024 in Nashville, and as part of that event will host a $844,600 per seat fundraising dinner, where particularly eager holders can get a selfie with the man himself for $60,000 (or $100,000 for couples). The event will also feature Vice-Presidential candidate J.D. Vance, as well as popular political personalities Vivek Ramaswamy and Tulsi Gabbard.

Also floating around the social networks are rumors that Trump intends to announce a BTC “strategic reserve,” perhaps with part or all of the $5 billion in BTC the U.S. government has confiscated over the years from criminals, real and imagined.

“Biden’s hatred of Bitcoin only helps China, Russia, and the Radical Communist Left,” Trump added in his Truth Social post. This rhetoric, it must be said, is not out of tune with that of digital asset fans across the board, including the BSV world.

Will the ‘Trump Pump’ last?

How excited should the digital asset world be at the prospect of an enduring “Trump Pump”? (We’ll lump all asset holders into this category since the equity markets tend to follow BTC’s trendline with varying degrees of volatility.) Does it signify a longer-term bullish trend, or will it be memory-holed like so many of Donald Trump’s other out-of-the-box promises?

It’s no secret that, at various points over the past seven years, Trump has also promised or hinted he would build a wall on the U.S./Mexico border, end birthright citizenship, put Hillary Clinton on trial, and deport all illegal immigrants. Those “intentions” won him plenty of votes and support but never materialized.

By appealing to “crypto” (and specifically BTC) holders, Trump is signaling he certainly cares about their numbers and support base, and their donation dollars. Since most BTC holders care more about their asset’s USD value than its utility, there’s plenty of common ground there.

Barring some new black swan event (and we’re not discounting that possibility, given the current environment), the “Trump Trade/Trump Pump” could see BTC prices continuing to rise for months to come. Should Trump win the election, the pump could go into overdrive.

A reminder that hash follows price

More curious is Trump’s support for BTC miners and his comments about their strategic importance to the U.S. energy grid. This suggests his policy plans may go deeper than simply mining BTC holders’ USD reserves for donations.

Unlike Bitcoin holders, mining hardware operations and mining pools haven’t been as lucrative a support group in recent times. Post-halving on all SHA-256 blockchains has seen both profits and hash rates experience steady declines.

In yet another case of the more accurate “Hash follows Price” meme, BTC’s total hashing power spiked by 18,000 PH/s in the wake of the Trump Pump. Note that this is the inverse of the long-standing BTC claim that coin prices increase after network hashing gains. As Kurt Wuckert Jr. noted previously, several other factors these days may influence BTC’s price, namely regulation, politics, and profit potential in the energy industry.

Hopefully Trump will elaborate further on how BTC mining and strategic reserves will help the U.S. become “energy dominant” when he speaks at the Nashville fundraiser. It’s even possible BTC may find some actual utility, not as a new technology, but simply as a large energy consumer and pool of accumulated USD wealth.

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