Don’t look now, but the bitcoin price is already surging back from its early July lows to trade comfortably above $11,000. And one fundamental catalyst might have come from an unlikely ally: US President Donald Trump.
Earlier on Wednesday, Trump accused China and Europe of playing a “big currency manipulation game,” debasing the yuan and euro by pumping large amounts of cash into the market to make their exports more attractive.
But then the president went a step further, calling for the US to follow suit and manipulate the US dollar to prevent it from continuing to strengthen. While a strong US dollar increases purchasing power abroad, it also makes US exports more expensive – and less competitive.
Crypto advocates seized on the tweet, arguing that proposals like that are exactly why Satoshi Nakamoto created bitcoin in the first place. They also noted that a fiat manipulation arms race would prove massively bullish for hedge assets like cryptocurrency.
Here’s CasaHODL’s Jameson Lopp:
“There’s one perspective that Bitcoin need not do anything else in order to become a global reserve currency: all it needs to do is nothing as it watches other systems inevitably fail under the follies of fickle fallible humans.”
And here’s Peter McCormack of the What Bitcoin Did podcast and Craig Wright lawsuit fame:
Meanwhile, the bitcoin price continues to bounce back from its early-week wipeout, which swiftly erased around 30% of BTC’s market cap.
As of the time of writing, bitcoin traded at $11,319 on Bitstamp after peaking at $11,575 earlier in the day.
To be sure, the cryptocurrency had been climbing ever since bouncing off its July 2 low of $9,614. So it’s not clear whether Trump’s funny money tweet gave the crypto market much actual fundamental support.
Additionally, BTC trading volume has declined considerably since the expiration of the parabolic late June rally, so it’s also difficult to discern whether this current bounce has staying power.
According to CoinMarketBook, bitcoin currently has a bit more than $300 million worth of buy support – the sum of all buy orders within 10% of the highest bid – down from around $400 million on July 1.
Notably, Trump is not the only prominent US politician who is unwittingly making the case for cryptocurrency adoption.
Recently, George Mason University economist Tyler Cowen speculated that out-of-control deficits, combined with the “wealth tax” advocated by Elizabeth Warren and other progressive Democratic presidential candidates, had contributed to bitcoin’s mammoth 2019 ascent.
Again, it’s difficult to parse precisely the degree to which Warren, Bernie Sanders, and other hard left Democrats have sent investors fleeing into bitcoin.
Even so, one thing is clear: If either Trump or Warren ever gets their way, it would be ridiculously bullish for cryptocurrencies (the uncensorable ones anyway).
Perhaps even more bullish than if Trump actually did tell Twitter to buy bitcoin.