Fox in the Henhouse
#127: Implications of Pro-Bitcoin President
“If Bitcoin is going to the moon, I want America to be the nation that leads the way.”
-Donald Trump
The U.S. presidential election is just 11 days away. With the quadrennial showdown reaching its final stretch, little is spared from political framing, certainly not finance.
The election begs for event-driven trades; Harris or Trump baskets defined by their competing policies on tariffs, taxes, energy, or immigration. A quick search will reveal plenty of opinions on how U.S. Treasury yields, equities, and foreign exchange might perform across the spectrum of executive and legislative electoral outcomes. While a fraught task, perhaps some of these baskets will prove useful.
Instead, I want to focus on one topic that has piqued my personal interest throughout this cycle — one that ties directly into long-term monetary strategy, government finances, reserve currency and international trade. That is, the United States’ strategy on Bitcoin.
Bitcoin is widely considered to be part of the “Trump Trade”, given the GOP nominee’s statements of support including in his July speech at the annual Bitcoin Conference in Nashville. There is no shortage of euphoric BTC price targets from coin-holders in the event of a Trump victory, or appropriately skeptical takes on Trump’s own defi endeavor, World Liberty Financial.
I suspect that opinions on this topic fall in line with prior persuasions towards Bitcoin (or Trump), but I encourage readers to check these notions at the door. The former President and leading candidate according to prediction markets has campaigned on the importance of cryptocurrencies and has promised to establish a National Strategic Bitcoin Stockpile. Relative to the disdain or indifference of most global leaders, this is a notable departure, even if it is a pander to crypto-motivated voters and donors.
These proposals can’t be viewed in isolation. In Bitcoin’s brief existence, the digital asset has progressively gained institutional acceptance and a legal framework, growing ever more integrated and accessible in global financial markets. Over the same period, government debt has soared under widening deficits and free spending, chipping away at the facade of firm fiat.
If El Salvador adopts a Bitcoin standard it can be written off as a reckless gamble. If the issuer of the U.S. dollar begins to stockpile bitcoin, it is reckless to ignore.
From whatever baseline you assume, the possibility that Bitcoin plays a significant role in global finance continues to grow. Economists at the major central banks are now beginning to worry about the impact of a fiat alternative on wealth distribution, monetary policy, and government financing. The election of a crypto-friendly U.S. President, influenced and funded by Bitcoin supporters, is like a fox in the henhouse.