The events of recent six months have determined the prevailing cryptocurrency trends for the latter half of 2019. It became quite obvious that everyone who predicted crypto-frosts, after the April thaw, was mistaken. This became clear in June and July. However, forecasts for the fall are also quite optimistic.
In addition to the natural growth in demand for the main crypto-assets, high interest in the blockchain, the speculative factor and the next bitcoin block halving coming in 2020, news-breaks seriously affect the growth of the cryptocurrency market. One of the news generators that significantly affects the cryptocurrency market is US President Donald Trump.
Trump’s figure, however, should be taken as a complex of factors, each of which is reflected in the cryptocurrency market. Today, you can notice a fairly predictable reaction of the industry to Trump’s statements about digital money, his decisions and actions regarding the PRC, as well as the bills passed by the US President that indirectly affect the crypto business and the interests of the crypto community.
Trump's Tweets and Bitcoin Price
Despite Trump’s negative rhetoric regarding bitcoin and cryptocurrencies in general, the very fact of their mentioning by the head of the White House was received positively. Amid his comments that digital money is “unregulated” and based on “air,” the price of BTC has risen. Such mention is evidence of the recognition of crypto-assets as a significant financial instrument.
Trump’s comment made bitcoin and crypto-assets one of the topics of the election race as a whole, and accordingly — presented the coin with many more informational reasons. The head of one of the largest cryptocurrency exchanges, Jeremy Aller, noted that the statement by the US president demonstrated that “cryptocurrencies are now a presidential/global policy issue.”
Thus, the more America’s first person talks about a new type of asset, the higher their rate will be since almost every media mention of tokens by officials is a positive factor. And he will have to mention them since he has already touched upon the problems of crypto regulation and included it in the election agenda automatically. A start has been made and it is obvious that the first mention will launch an informational chain reaction.
Manifestations of instability in world markets and the risks associated with trade wars push investors to use cryptocurrencies as a safe haven asset, an alternative financial instrument that is not dependent on traditional factors. Currently, the main focus of instability is the flaring trade war between the United States and China.
One of the main driving forces of this conflict is Trump’s systemic position, who seeks to oust Chinese players from the US market by any means. The US President’s tweet about the introduction of next customs barriers in the form of a 10% duty on Chinese goods allowed Bitcoin to quickly add 5% in 24 hours (according to CoinDesk).
There is a tendency to use BTC as a kind of “digital gold”. The impact of trade conflicts and geopolitical reasons on the growth of Bitcoin exchange rate and trust in it as a safety net asset are shared by TradeBlock Research Director John Todaro, CryptoCompare co-founder Charles Hayter and Cindicato startup CEO Mike Brusov.
Trump's Tax Plan
The bill, signed by Donald Trump at the end of December is the most serious change in US in recent 30 years. However, it does not directly concern cryptocurrencies and does not introduce effective regulatory standards for digital assets. This fact clearly plays into the hands of digital money and is capable of reflecting trends on its own, provoking a long-term appreciation of the new type of asset.
Also, some formulations of the new law allow avoiding tax liability in situations when it comes to cryptocurrencies.
The norms of the new amended law are not always loyal to miners, but the problem is that without an appropriate interpretation, restrictive measures are very difficult to apply. Therefore, in general, Trump’s tax code is positively assessed by investors, traders and miners, and, accordingly, also positively affects the growth of cryptocurrency rates in the long term.
Federal Reserve’s Interest Rate Cut
The described factors occur against the background of the global Bitcoin-strengthening factor — the Federal funds rate reduction. As in the case of other destabilizing factors, digital money acts as an emergency reserve financial instrument. It is known that lower rates lead to higher inflation, which naturally increases the value of alternative assets. The CEO of BitBull Capital, Joe Di Pasquale, in this situation sees the similarity of investments in bitcoins with the purchase of gold. In a comment for Forbes he noted:
“The price of gold has historically responded positively to lower interest rates, and Bitcoin, which shares similar principles, is also responding positively.”
Thus, the FFR reduction is a kind of cryptocurrency rate catalyst that enhances information and speculative factors.
Crypto Summer in the Autumn
All of the above mentioned in the short term indicates the maintenance of stable growth in the rates of cryptocurrencies and bitcoin in particular. The likelihood that something will significantly change the situation in the next six months is extremely small. This is possible only when certain unpredictable factors appear, such as large-scale speculative manipulations, a sudden cardinal change in US foreign economic policy, or something that will cause an unexpected increase in FFR. Due to the fact that all these scenarios are unlikely, it is obvious that autumn will become real, even tropical crypto summer.