Trump Could Be Engineering the Next Bitcoin Price Surge
Bitcoin might be losing to gold to start the year, but as Trump seeks to drive rate cuts he could push the next crypto price catalyst.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
As we started the year, Bitcoin was hailed as the asset to own going into 2025 given the massive adoption between the larger players and institutions like BlackRock and Fidelity post the launch of their ETFs.
In the last few cycles, Bitcoin was traded only by the diehard blockchainers. Back then, as it was still in its nascent phase, it saw much wilder swings from peaks to troughs in shorter time frames. As the time passed on and Bitcoin was being better understood and its adoption was growing, people coined it "digital gold" and started drawing comparisons to its performance versus that of the relic gold.
Gold is considered safe and is termed a relic by many in the crypto world. Gold may be boring, but it is an asset that closed the year up 25% last year. This year, it is up 15% and it is not even the end of Q1. Not bad for a boring asset.
Bitcoin is down 10% year-to-date and, with the recent turmoil in markets, people are now questioning everything to do with crypto or markets. How the world changes in a few weeks!
It is true that Bitcoin has massively underperformed, but if one were to extend the lens going back to October 2024, Bitcoin is still up about 40% and gold about 15%. So, time horizons matter a lot when making these comparisons. The performance of one versus the other is all dependent on leverage and liquidity.
At the start of the year, as the economy was going through a soft patch together with daily Trump tariffs, this saw a reduction in risk across the board. For the last two years, everyone was invested in the same handful of names — Magnificent 7 and Bitcoin/cryptocurrencies — playing it via 3x- to 4x-leveraged ETFs. The same rush to get in is the same rush to get out, hence why the moves are amplified on the way up and down.
Gold is your classic safe haven, a store of value that will rise any time one fears a recession or uncertainty in the markets. It is also a true inflation hedge. Bitcoin may like to be thought of as an inflation hedge, but it is only that in bullish times. When money is printed, or rates cut, risk assets go up as the system is flush with liquidity. As fiat currency is endlessly debased, these digital assets start to shine as they retain the value of assets in the future.
The bigger question to be asked today is whether the U.S. economy is heading into a recession, and whether President Trump and Elon Musk are trying to engineer one in order for the Fed to be able to cut rates sooner that than later, as the U.S. debt needs to be refinanced and rates are still too high.
For MAGA to work, Trump needs a lower dollar that will boost exports and encourage on-shoring, getting companies to start producing on shore. Scott Bessent and Trump inherited an economy bloated with federal employees and one on an unsustainable fiscal path. That is where DOGE comes in, as it tries to trim the fat and move jobs away from the public sector to the private sector. The only way to close the debt/GDP gap is to get the denominator to grow, and that can only come from organic growth. Trump knows it.
Gold and bitcoin are two sides of the same coin, but one is just more levered to the economic cycle. Bitcoin does have a limited supply unlike gold, so if there is truly a rush to pick up inflation-protected assets when equities and bonds no longer see any growth, Bitcoin can shine!
Know what you own and why — no asset with such growth can give one-multiple “x” returns without immense volatility as well.
At the time of publication, Bengali had no positions in any securities mentioned.
