Bitcoin is approaching all-time highs. What happens if Trump wins?

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

At the same time, Bitcoin's price has risen sharply and recently surpassed $67,000, a level not far from its all-time high of $73,750 reached seven months ago.

Given this price surge and Bitcoin's new status as an issue in the presidential campaigns 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 advisers, including Robert F. Kennedy Jr. and his sons Eric and Don Jr., have expressed their appreciation for Bitcoin's value, a sharp contrast to the current administration's more skeptical stance.

Meanwhile, the Bitcoin community largely sees Trump's potential leadership as a boon for the industry, particularly given his promise to remove Gary Gensler from his position as chairman of the Securities and Exchange Commission (SEC).

Are crypto regulation changes coming?

Gensler has been widely criticized in both the Bitcoin and broader crypto space for regulating through arbitrary enforcement actions rather than proactive, principled rulemaking. Gensler, long suspected of joining Elizabeth Warren's anti-crypto army in exchange for a coveted position in a Democratic administration, may have his political instincts questioned in the face of a Harris defeat.

This “regulation by enforcement” by the SEC has stifled innovation and capital investment in the crypto industry. (Side note: “Crypto industry” is just another word for a galaxy of startups and companies leveraging new technologies to advance financial technology.)

Crypto companies have begged to be allowed into the US compliance and regulatory system, been turned away, and then faced expensive legal consequences for crossing an invisible line. This is why the crypto industry has rallied around Trump – and why Harris has failed to win their support as he shied away from explicitly rejecting the Biden administration's approach.

A change in leadership at the SEC could trigger a huge shift in Bitcoin's regulatory environment in the US, but the overall story is even more significant.

Recent investigative reports by Nic Carter uncovered a targeted and possibly illegal attempt by regulators in 2022 to shut down crypto-friendly banks. This so-called “Operation Chokepoint 2.0” initiative has been known about for years, but its depth has only recently been discovered. Carter's report revealed a coordinated plan that not only restricted access to banking services for companies involved in cryptocurrencies, but also included the deliberate bankruptcy of otherwise healthy banks that were willing to work with financial innovators.

If Trump wins and dismantles these behind-the-scenes efforts, it would dramatically change the fintech landscape. Banks – aware that their traditional business models are underperforming in today’s economy – already have a compelling incentive to use Bitcoin. But they can't take the plunge until their compliance departments believe the U.S. government's regulatory stance has permanently changed. There is little interest in forging new relationships with crypto firms when there is a risk that the next government will pull the rug out from under them.

However, a regulatory thaw during a Trump presidency would likely outlast his term. Large 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 lead to even more capital inflows and create a new level of liquidity and price discovery in the market.

The price of Bitcoin depends on privacy and self-custody

What could this all mean for Bitcoin price? Increased liquidity and institutional acceptance would likely stabilize some of Bitcoin's notorious volatility and make it more attractive as a store of value for traditional investors. At the same time, Bitcoin's fixed supply, along with a significant increase in demand, could push the exchange rate higher against the dollar – with one important caveat.

Bitcoin is digital property and has a physical existence. It is possible and relatively easy for companies, individuals and investment funds to hold physical Bitcoins in their own custody.

However, increased demand for physical Bitcoins is not quite the same as increased demand for Bitcoin price dependence, which can be achieved through the use of paper Bitcoins.

Unless investors understand the importance of self-custody, any increase in demand will be accompanied by an increase in the supply of paper Bitcoins (also known as IOUs). This increase in supply would prevent the price of spot Bitcoin from rising as high as it otherwise would.

Additionally, one of the Bitcoin network’s most important functions – final settlement every 10 minutes – will be at risk unless financial privacy becomes a priority for voters.

If Operation Chokepoint 2.0 is canceled and Elizabeth Warren's anti-crypto army is forgotten, the crypto community will face a defining moment. Executives and developers must decide which projects will most effectively advance both the industry and humanity as a whole.

Your top priority should be to educate the public about the critical importance of self-custody and provide tools that empower individuals to protect their own assets.

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

Without financial privacy and self-custody readily available to every consumer, driving Bitcoin adoption could become indistinguishable from laying the groundwork for central bank digital currencies (CBDCs).

The convergence of political and financial forces appears to be laying the groundwork for a new phase in Bitcoin's journey, one in which Bitcoin could become firmly entrenched 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 implements his stated Bitcoin policies, the price of $1,000,000 per Bitcoin may no longer be as far away as it once seemed .