Trump is the US President elect – and crypto prices seem to love it. Prices are up across the board with BTC setting a new all time high in the past week. The Donald also has a new crypto platform – World Liberty Financial – which seems like it isn’t in line with decentralized values.
And then there is the new veep – JD Vance. He is an interesting character. With deep connections to Peter Thiel – the new veep has the potential to be a nightmare for privacy and decentralization.
The “Trump Trade” is curious. The USD flies higher, metals puke, and crypto pumps. Whether or not these currents have anything to do with underlying fundamentals isn’t yet known. Turmp can’t make policy for another few months.
To be sure – changes are here. But it won’t be a straight shot up for cryptos.
The Macro Mess
McTrumper is a new direction for US policy. But he isn’t a magic bullet for the macro issues that could create big problems for his administration. With all the election hype, the FEDs quarter point cut got lost in the mix.
There is no doubt that the global economy is flagging. Central banks know monetary conditions are too tight – but tiny rate cuts aren’t going to be enough to spur any kind of economic recovery.
The US political season dominated the news cycle for months – all over the world. We have been using the internet less to avoid the hype wave. The whole world was watching the US election – there was no escaping it.
No one seems to be watching the chaos unfold globally. Germany fell apart. War grinds on in the Middle East – although Trump seems to be intimidating the Houthis in Yemen, which is more than B2 strikes were able to accomplish.
Trump isn’t a solution to a tightening macro environment – and a stronger USD will exacerbate an already strained global liquidity environment. But there is much, much more to this picture.
Positive Moves For US Crypto Regulation
Trump shares our view on current SEC head Gensler. The only question now is whether Gensler will quit before Trump assumes office and fires him. “Gensler out” is likely the end of the XRP drama (this is not financial advice – BUY XRP) and the start of a new chapter in US crypto regulations.
Everyone on the short list for the next SEC head will be much better than Gensler. Dan Gallagher, the top lawyer for Robinhood, is at the top of the short list for the next SEC head at the moment. Regardless of the appointment, all the names look positive for crypto.
A pile of beans would be better for US crypto regulations than Gensler, who is reportedly looking for ant farms he can micro manage with a stick and a lighter. We wish him the best of luck in his future endeavors.
The Veep’s Data Fetish
JD Vance is an interesting guy. While he is assuming veep via a spot in Congress, his origins are in private equity. Veep Vance worked with Peter Thiel – who has a very tricky set of values.
In fact – Vance was once a critic of Trump – and Thiel brought Trump and Vance together at Mar-A-Lago to make things work. Now, as a direct result of that meeting, Vance is the veep.
Thiel is clearly a player in the Trump administration. He also has some curious businesses for a self-professed libertarian. Thiel is behind both Clearview AI and Palantir, which combined with Paypal, could be the genesis of a nose-to-tail social credit system (just like in China).
Here is a lot more info about veep Vance, Thiel and Palantir from some wise minds:
It’s pretty obvious that Thiel isn’t any sort of libertarian – or perhaps he is most hypocritical libertarian in history. Maybe Thiel is a libertarian in the sense a dictator is – the dictator has tremendous liberty – they are the only one!
We don’t know if Vance is Thiel’s backdoor into the White House – but if he is – look for larger violations of personal privacy as the hypocritical Thiel uses Vance to advance his data-driven agenda. Whatever it is.
World Liberty?
We can’t write much about Trump’s World Liberty Financial – as not much is known about the platform. It is generating hype – like anything connected to The Donald.
The platform plans to offer a range of services, but its native token can’t leave the platform. It isn’t tradable on public blockchains. Weird.
Regardless, no one is making you use World Liberty Financial – so in that sense it is a win for freedom.
Huge Debt!!!
US debt is basically out of control – and there isn’t much Trump can do can stop it. With interest on existing debt at over $1.3 trillion USD, the mathematics of the situation make it almost impossible to avoid inflationary collapse.
Trump is good at dealing with bankruptcy – and this time he can print money to fill in the income gaps. Much like Zimbabwe and Argentina – the result would be hyperinflation – which is probably unavoidable at this point.
The question now is timing.
Rising debts will spur inflation – and people will chase any asset that supports the preservation of buying power. Cryptos and metals are both on the list – and should rally over the next few years as Trump deals with the economic reality of monetary collapse.
Liquidity Still Looks Strained
Access to debt is limited globally – with many consumers finding that the ease of borrowing isn’t part of the economic equation anymore. Cheaper money (lower rates) doesn’t mean much if few people can actually get a loan – which is how lending seems to be in many advanced economies.
Inflation isn’t in the double digits anymore – but 7%+ annual inflation in the USA isn’t amazing. Given the low GDP prints, if the actual inflation figures were used, the US would look like it was in the middle of a years-long depression.
To be 1000% sure – Trump is taking over the US Presidency at a time when there are a multitude of economic problems, and policy can’t solve many of them. Dealing with inflation and US Governmental debt come to mind as impossible tasks.
Higher asset prices don’t mean the economy is strong – they just mean prices are higher. Without the ability to access debt – higher asset prices could spell disaster for anyone who can’t take advantage of the bull market (inflation driven gains).
Just for fun – if there is a shadowy group (we think there is) behind multiple Trump assassination attempts, they likely could create a financial crisis that neuters Trump in the early days of his next presidency.
An asset price crunch would give Trump and the FED the political mandate to blast the market with a tidal wave of new money, much like the 2008 game plan.
Something to keep in mind…
As Always – Crypto Moves Up
It’s impossible to ignore the crypto rally Trump’s election created.
We assign the buying enthusiasm to a new crypto regulatory environment in the USA, which is positive. Trump has mixed views on crypto, but he is far more supportive then whoever lost the election (Harris is a puppet, so is Biden).
While we don’t like Donald Trump, we do love the ideals of human rights and a liberal (classical liberal) social structure. Personal rights. Legal protection for all members of the society. Direct political representation. All good ideas that need to be protected.
It all beats the social contract on offer in communist China.
Good luck Mr. President elect (sincerely) – you will need it.
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