Can Donald Trump Elevate Cryptocurrency to a National Focus or Instigate the Largest Pump-and-Dump Scheme?
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- On Friday, Bitcoin remains stable, hovering over the $104,000 mark, as the open interest in BTC eclipses the $65 billion threshold.
- The forthcoming presidential inauguration of Donald Trump, set for Monday, is touted by some experts as a potential catalyst for a cryptocoin pump-and-dump spectacle.
- Frank Chaparro, a luminary in cryptocurrency circles, suggests Trump’s swearing-in signifies the cessation of relentless pressure on crypto enterprises over the past four years.
Bitcoin surged to a peak of $104,254 on Friday. Market participants foresee a surge induced by Trump’s inauguration on Monday. With high expectations, the crypto sector looks forward to policies that might establish digital currencies as an area of national significance.
The total valuation of the cryptocurrency market has soared beyond $3.78 billion as of Friday, marking an uptick of more than 4% within a 24-hour span.
Trump’s potential impact on cryptocurrency as a federal concern
A recent Bloomberg article updated on Friday suggests the incoming President Trump might issue an executive order concerning cryptocurrencies, assigning them status as a “national priority,” according to insiders. This mandate could direct US government branches to collaborate with the crypto sector and potentially establish a crypto-centric advisory panel. However, the exact contents of the anticipated directive are still under wraps.
With the incoming administration, digital currency corporations and super PACs backed by entities like Ripple Labs and Coinbase are hopeful. During the past administration, the cryptocurrency landscape faced litigation from regulators such as the SEC.
The Bloomberg piece posits that the incoming administration may consider developing a national reserve of Bitcoin, declaring cryptocurrencies a federal priority, or ceasing legal proceedings against crypto businesses.
An official announcement regarding the executive order might surface as early as Monday after finalization, insiders hint.
In a conversation with Bloomberg, Kara Calvert, the Vice President of US policy at Coinbase, said:
“Donald Trump’s potential actions could be a signal that the US is reclaiming leadership in the industry, warning other nations to keep pace or risk falling behind.”
Frank Chaparro, noted Bitcoin advocate and Director of Special Projects at The Block, shared with the New York Post:
“The broad market breathes a sigh of relief. There’s a foundational shift in the government’s position towards cryptocurrencies, infusing a positive sentiment. Ultimately, this could enable banks, previously hesitant, to engage with crypto.”
The possible pump-and-dump scenario around the inauguration
Jeffrey Funk, emeritus professor and NTT DoCoMo mobile science prize-winner, together with Gary Smith, an economics professor at Pomona College, argue that Trump’s inauguration may precipitate a major pump-and-dump event within the crypto sector.
Funk and Smith, voicing their opinion in MarketWatch, caution that Bitcoin’s market has been susceptible to manipulation. Their perspective involves the government potentially inflating the Bitcoin market value by continuously purchasing the currency at escalating prices, leading to speculative hype and eventual market dump.
“A pump-and-dump scenario envisioned by Trump could see a surge in buying, spurred by misleading rumors, quickly followed by the original manipulators selling off their stakes to the misled investors left holding the ‘bag’.”
At the time of this writing, Bitcoin’s open interest has surged past $69 billion, with a current trading value of $104,549.
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