Unlock the White House Watch newsletter for free
Your guide to what the 2024 US election means for Washington and the world
Apparently it is time to let go of your old mindset (man). Forget about the past. Imagine a new and more glorious future. And buy bitcoin.
This is a serious struggle for normies like me. Bitcoin is still not a proper currency — try using it to buy a coffee or pay your taxes almost anywhere in the world. It doesn’t pay a yield or a dividend or provide a claim to anything other than itself. The ecosystem around it is peppered with wholesome, sensible people but dominated by cranks and grifters, especially as you look past bitcoin and into the vast universe of smaller tokens and coins.
But even I have to admit that the rally since the re-election of Donald Trump as US president is something special — a big bang moment that is impossible to ignore. The price has vaulted over $80,000 for the first time, marking a rise of almost 30 per cent since election day, which, as a reminder, was just last week. A target of $100,000 by the end of this year is not outlandish. What a time to be alive and what a payday for bitcoin holders.
Analysts at Bernstein are not holding back. “Welcome to the crypto bull market,” they wrote in a note on Monday. “Buy everything you can . . . We recommend investors who have so far remained shy of any crypto exposure due to regulatory concerns ‘invert their mental model’.”
Think of the volatility that speculating on crypto injects into a portfolio, cautions UBS. “We are sceptical that crypto assets can make significant inroads in meaningful and disruptive real-world use cases,” it adds.
Any effort to come up with a macroeconomic rationale for the price of crypto is also a path to madness. But let’s do what Bernstein suggests and think differently. This rally is about two powerful forces: vibes and vision.
Vibes have always accounted for a good portion of the ups and downs in crypto. In this case, Trump surrounded himself during the election campaign with crypto true believers. He attended the Bitcoin 2024 conference in Nashville, described by Bloomberg as a “MAGA-fied crypto lovefest”.
Along with his sons, he backed a new crypto venture called World Liberty Financial. Elon Musk, high priest of crypto, was one of his biggest backers. The token Musk frequently boosts, Dogecoin, or Doge for short, has gained 145 per cent since election day. Musk has been chosen to lead a “department of government efficiency”, or Doge for short.
All of this and more points to a new administration that is crypto friendly and in no mood to regulate it out of existence. The vibes are good. “People are going crazy,” said Ilan Solot at brokerage Marex.
The vibe shift means that even conservative investors are increasingly willing to give crypto a chance. “This is a global portfolio rebalancing,” Solot said.
Farnborough-based pensions consultant Cartwright says that even before the US election, it advised the first ever UK pension scheme — a £50mn defined-benefit company scheme of the type that would typically rely heavily on boring old government bonds — to put 3 per cent of its portfolio directly in to bitcoin.
“Pensions and institutional investors have got loads of different asset classes,” said Sam Roberts, a director at Cartwright. “We’re saying bitcoin should be on the list.” The unnamed pension scheme he advised bought bitcoin in October and has scooped up enormous winnings since.
The broader vision is that Trump 2.0 could treat crypto not just as a speculative wheeze but as a strategic imperative. Robert F Kennedy Jr, once a rival and now a potential pick for high office, spoke at length at that Nashville conference about the need to build up national reserves of bitcoin, on a scale that rivals gold reserves. “It was a mind-blowing speech. He had really done his research,” said Richard Byworth at Swiss financial group Syz Capital. This plan could potentially start with declining to sell crypto assets seized by the federal government over the years but later expand, Kennedy said, to buying hundreds of bitcoin every day. It may be a struggle to take literally someone who opposes vaccines and wants to remove fluoride from the water system, but again: new thinking.
Byworth reckons some of the frenzied bitcoin buying in recent days is the work of other nation states around the world keen to get in before Uncle Sam starts buying. Whether this vision comes to fruition or not, “they are adding bitcoin as if this is on the cards”, he said.
Those of us still waiting for a clean articulation of what bitcoin is will remain frustrated. But it’s getting harder every day to fight against the crypto revolution.