“CONGRATULATIONS BITCOINERS!!! $100,000!!! YOU ARE WELCOME!!! “Together we will make America great again!” he wrote on Truth Social, his social network.
Trump and bitcoin
In his first term, Trump accused bitcoin of being a scam. His speech changed radically in his last campaignin which he even promised to make the US the world capital of bitcoin and cryptocurrencies.
This 180 degree turn was due to the fact that a good part of his campaign was financed by companies in this sector.
The tycoon has said he could create a cryptocurrency ministry or a strategic bitcoin reserve in the country.
However, the final push was the announcement of the future appointment of the Republican lawyer Paul Atkinspro-cryptocurrencies, to lead the Securities and Exchange Commission, the regulatory authority for financial markets, also known as SEC. The value of the asset increased by 8%.
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This way, The revaluation is around 50% since the Republican’s victory and more than 130% since the beginning of this year.
Consulted by El Comercio, Walter Bazán, professor of Finance at the Universidad del Pacífico and expert in cryptocurrencies, explains that in general terms the greater acceptance of cryptocurrency is due to the fact that “People have begun to better understand the advantages of this technology, losing their fear”. Although it also clarifies that bitcoin, although it is the largest cryptocurrency, is only one application within a much broader market that includes various cryptocurrencies.
With several promises made by Trump during the campaign, it remains to be seen if they actually materialize.
“What has had an impact on the market are events such as the Bitcoin ETFs, MicroStrategy’s decisions, and the cut in interest rates. Compared to these events, the Trump factor has a minor influence, although it is still relevant”points out the teacher.
Volatility and future of bitcoin
Throughout its 16 years of existence, bitcoin has been the most reputable cryptocurrency, although it has not been without controversy. It is accused of being used to launder money and being the preferred currency of hackers.
Greater regulation could clarify many of the current doubts, in addition to giving greater confidence to investors.
Although much of the enthusiasm around bitcoin is speculative, the currency has gained some respectability in recent years. A clear example is the effervescence generated by Trump’s victory. Could your proposals control its volatility?
“It is unlikely. The current volatility is mainly due to the fact that Many people still do not fully understand the advantages of this technology. If we compare, technology companies such as Nvidia, Netflix or Tesla also present high volatility, although not as extreme as that of Bitcoin, and this occurs in much more regulated markets.Bazán comments to this newspaper.
“Volatility, in large part, also comes from small investors, who usually operate with short-term horizons. On the contrary, large institutional investors, such as BlackRock or Fidelity, have a more medium or long-term vision, which helps stabilize the market a little. Therefore, volatility does not depend so much on regulation as on the knowledge and behavior of market actors.”.
The specialist also mentions that support for bitcoin would probably generate a positive effect on the crypto market in general. In countries like the US and some in Europe, Exchanges are well regulated, requiring layers of security such as identity verification. This helps make operations transparent and makes both bitcoin and other cryptocurrencies more trustworthy for investors.
It is worth remembering that bad actors exist in any market, as has been seen in recent cases with traditional banks. Therefore, regulation must not only seek transparency, but also guarantee that the information is reliable, which will benefit both large and small investors.
The experience of El Salvador
El Salvador was the first country to adopt bitcoin as one of its legal currencies in September 2021; However, it has not completely penetrated the population.
According to a study by the University Institute of Public Opinion of the Central American University (UCA), At the end of 2023, 88% of Salvadorans do not use cryptocurrency.
Despite this, the head of state of El Salvador, Nayib Bukele, celebrated this Thursday the 5th the accumulated gains of his country.
“Thank God, our country’s bitcoin reserves are now worth 127.30% more than what we paid for them, which means an increase of $344 million,” he wrote on his Facebook social network account.
Origen del bitcoin
Bitcoin, created in 2008 by the enigmatic Satoshi Nakamoto, emerged as an alternative to escape the control of traditional financial institutions. Its basis is ‘blockchain’ technology, a system that records transactions in a decentralized and secure manner, guaranteeing that they cannot be altered thanks to a network of globally distributed computers.
The creation of new bitcoins, known as mining, is carried out as a “reward” for computers that solve complex mathematical problems. This energy-intensive process validates transactions on the network. To prevent uncontrolled growth, Nakamoto established a limit of 21 million coins, a figure that is expected to be reached in the year 2140.
In January, US financial regulators took a significant step by approving bitcoin exchange-traded funds. This measure makes it easier for a broader public to invest in this cryptocurrency without having to purchase it directly, opening new possibilities for its mass adoption.