What's going on with bitcoin?

ON WEDNESDAY EVENING Australian time, as Donald Trump was announced as the winner of the 2024 US presidential election, the price of bitcoin hit as much as USD $75,005.08. This topped the cryptocurrency’s previous all-time peak of USD $73,797.98, which it reached this March.

If you’re wondering why, after years of laying somewhat low (at least in the mainstream), bitcoin is surging, it has a lot to do with Trump. The ex-reality TV star and convicted felon is pro-crypto – not only did he speak at the 2024 bitcoin conference this year, but throughout his campaign, he’s also enjoyed the support of tech bros. Jeff Bezos, Sam Altman and Tim Cook have all reportedly called Trump to congratulate him on his victory in the days since. Elon Musk, who allowed Trump back on X (formerly Twitter) in 2022 after he was banned by the app’s former owners, donated millions of dollars to the Trump campaign.

So, what does this mean for the wider financial market, and the future of the world’s biggest cryptocurrency? We find out.

Why is bitcoin going up?

Bitcoin has hit an all-time high because Trump, who was previously a crypto sceptic, backflipped on his stance to take a favourable view of cryptocurrencies in the lead up to the election. His promise to make the United States the “bitcoin and cryptocurrency capital of the world” has effectively given those who dabble in crypto confidence that the currency will become stronger than ever under Trump’s second presidency.

The Biden administration led a sweeping crackdown on crypto firms, so Trump’s support of the currency would explain its surge in value.

As part of his campaign, Trump also promised to create a national “strategic reserve” of bitcoin; he also accepted donations in crypto form, and recently launched a new crypto-focused venture, World Liberty Financial (WLF), with members on his family, which is focused on crypto trading.

What is happening with crypto going up?

Bitcoin isn’t the only currency that’s risen in the hours since Trump claimed election victory. On Wall Street, the Dow Jones soared three percent, while the S&P500 and Nasdaq Composite went up around two per cent. Why? Because those who voted for Trump view him as more focused on economic gain. And since the Democrats lost control of the Senate, pundits are also pointing out that Trump will be able to pass his proposed tax cuts in seamless fashion.

Many have argued that Trump’s tax cuts unfairly favour the rich. For example, he’s called for lowering the corporate tax rate to 15 percent for certain companies (the Tax Cuts and Jobs Act had previously lowered the to corporate tax rate from 35 percent to 21 percent.)

The Australian dollar has also risen, up 0.2 percent at 65.8 US cents.

So, what does this all mean? Experts are saying that bitcoin’s overnight surge, which follows surges earlier in the year, demonstrates its resilience as a store of value. It shows the currency is gaining further acceptance in both mainstream and emerging markets, a trend that, in the eyes of investors, Trump’s election win validates even further.