Trump’s Win Has Bitcoin Soaring. the ‘Normies’ Want In.

The Washington Post / Lisa Bonos

16:37 JST, November 17, 2024

Daniel Manson had been hesitant to put his money into cryptocurrency. The 21-year-old New Jersey college student watched friends dabble in digital assets, but he felt it was too risky.

Manson changed his mind after a small wager on an online prediction market that former president Donald Trump would win reelection netted a $6,200 windfall. He poured his winnings into bitcoin.

“I might as well put some money in it and see what happens,” Manson said in a phone interview Wednesday.

Manson is among the first-time bitcoin investors jumping into the market since Trump’s win. The value of a single unit of the cryptocurrency has soared to all-time highs and is nearing a milestone $100,000.

Trump has promised to create a more friendly regulatory environment for the industry and said he will make the United States into the “crypto capital of the planet.” Crypto investors and businesses are welcoming new converts or “normies” like Manson, who in the past week has been glued to his account balance.

“It definitely becomes obsessive,” Manson said, estimating that he checks it about 50 times daily. Cryptocurrency social media circles have been abuzz with longtime enthusiasts sharing screenshots of messages from newbies asking how to invest.

Not only bitcoin is soaring. As of Friday, the price of ethereum had grown more than 20 percent since Election Day. Dogecoin, a cryptocurrency that started as a meme-inspired joke, has doubled in value thanks to an unconventional branding choice by the nascent Trump administration.

The president-elect’s “first buddy” Elon Musk has been tapped to run a new “Department of Government Efficiency” – that’s DOGE – a nongovernmental body that will advise on how to slash government spending. There’s already DOGE merchandise for sale, including a shirt promoted by the Trump campaign on X this week depicting Musk and the president-elect on a landscape resembling Mars with a Shiba Inu, the dog breed that serves as dogecoin’s mascot.

Chainalysis, a blockchain analytics firm, found that the creation of new personal bitcoin wallets rose 26 percent in the 10 days after the election compared with the number created in the 10 days before the election. The aggregate bitcoin balance of new wallets post election has nearly tripled, Chainlysis found, and the average balance per wallet is up 124 percent.

Bitcoin, by far the largest cryptocurrency by market capitalization, was born amidst the Great Recession of 2007-2009, a time of deep skepticism about traditional finance.

Despite hopes from proponents it could make the financial system more dynamic and equitable, the currency is not widely used as a means of payment, and the crypto world has become known for scams and scandals.

Former mogul Sam Bankman-Fried got 25 years in prison for perpetrating one of the largest financial crimes in U.S. history through his crypto exchange FTX, and federal agencies in Washington have tussled over who and how the cryptocurrency industry should be regulated.

Bitcoin’s post-election rally this month follows moves that have brought cryptocurrency closer to mainstream finance, easing the path for normies to jump in.

In January, the Securities and Exchange Commission voted to allow banks and investment firms to sell exchange traded funds that own bitcoin to regular consumers. Some pension funds, which are typically risk-averse investors, now include bitcoin ETFs in their holdings. The city of Detroit and the states of Colorado, Utah and Louisiana now accept crypto for payments of some taxes and fees.

“The next wave of crypto adoption likely won’t be driven by crypto-native individuals, but by mainstream investors who prefer to access digital assets through their existing wealth management and financial adviser relationships,” Nathan McCauley, CEO and co-founder of Anchorage Digital, a cryptocurrency bank of institutions, said in a statement this week.

In an interview this week, Detroit’s Democratic mayor, Mike Duggan, recalled several public meetings in which young attendees asked why the city doesn’t accept cryptocurrency as payment. Duggan said the city decided to allow residents to pay property taxes in crypto in part because he wants to build a culture “that’s supporting tech innovators.”

Most Americans are not bought into crypto. A Pew Research Center survey conducted in February reported that 17 percent of U.S. adults said they have invested in, traded or used a cryptocurrency. The survey also found that use of cryptocurrency is “statistically equal” between Democrats and Republicans.

Tori Dunlap, CEO of Her First $100K, a personal finance platform aimed at women, said she hasn’t gotten a single question about crypto recently. Her audience is more concerned with the effects a Trump presidency might have on the economy as a whole.

Questions like “Can I afford my bills? How can I protect myself?” are top of mind, Dunlap said in an interview Wednesday. “Not: ‘Can I optimize my finances to invest in something that might be risky?’”

While Dunlap isn’t against digital assets, she advises that any speculative investment – such as cryptocurrency, art or gold – comprise no more than 5 percent of an individual’s portfolio.

Dennis Kelleher, president and CEO of Better Markets, a financial reform advocacy group, also advises caution. If the Trump administration cuts cryptocurrency regulation, “there are going to be few if any investor protections, which will make this already very volatile, conflict-ridden product even more risky and dangerous,” Kelleher said in a statement Wednesday.

The bump in bitcoin prices since Trump’s election victory has won him some new and unexpected fans. Tanya Jackson, a 37-year-old married mother of two in Sydney, put $500 into bitcoin a year ago after listening to audiobooks to understand how it works.

She has since put all of her savings into crypto, signed up for a master’s program in financial technology and started following U.S. politics to understand what the presidential candidates might do for crypto.

“I am not a fan of Trump, but about 50 percent of me was like: If he gets into office, I’m going to win at life,” Jackson said in a phone interview Wednesday. “Part of me has to support him.”