Tailwinds for BTC and Crypto

As Bitcoin takes a breather from an epic recent price rise, let's refocus on what possibly lies ahead for it and the greater crypto market. Unless you’ve been living under a rock, the U.S. Presidential Election result has catapulted Bitcoin and crypto into the spotlight. Is this the start of a renaissance for the crypto industry with a more informed and pro-innovation Republican President, House and Senate? Let’s have a closer look at the tailwinds that seem to be coming in thick and fast for Bitcoin from within the U.S. and from other global storm cells.

First, let’s start by assessing the most recent data surrounding Bitcoin ETFs within the U.S.

From November 10 to 13, 2024, Bitcoin-related ETFs experienced notable inflows. Specifically:

• November 10: Bitcoin ETFs saw net inflows of approximately US$337.3 million.

• November 11: Inflows were modest at US$37.7 million.

• November 12: Inflows surged to US$1.07 billion, coinciding with Bitcoin’s price approaching its all-time high.

These inflows represent an increase in investor interest, potential interest rate cuts from the Federal Reserve freeing up liquidity, broadening in the stock market indicated by the Russel 2000 small cap stocks and possibly the most incredible announcement: a strategic Bitcoin reserve for the United States.

Trump made this announcement leading up to the 2024 election. It was reinforced by Senator Cynthia Lummis, who through her support behind Trump’s vision of leveraging Bitcoin as a national asset. This strategy of acquiring 1 million Bitcoin to bolster stability and offset inflation has yet to be mapped out and presented to the House of Representatives or Senate, but with control of both legislature bodies, if ever there was a chance to get such legislation over the line, now is the time.

Another positive for crypto in general could be the imminent end to the reign of terror by SEC Chair Gary Gensler, who, with the assistance and backing of Senate Banking Committee member Senator Elizabeth Warren, sought to nuke crypto industry companies and banks that financed them. With a change of administration, it would appear as though Gary’s days are numbered.

Trump has mentioned he wants all mining of Bitcoin to be within the United States. Is this possible? While the idea of concentrating Bitcoin mining in the U.S. is ambitious, it is constrained by energy, environmental, economic, and policy considerations. Achieving such a goal would require addressing these issues comprehensively, which seems challenging in the near term, but less challenging with both legislature houses and a new pro-crypto SEC Chairperson.

That said, if he succeeds, this could usher in serious competition with government-level investment and gameplay to acquire Bitcoin, the energy-based, pristine asset. As per a previous article for Ainslie Crypto, sovereign states are turning to using renewable energy within their borders to mine Bitcoin, thus turning their own energy into value to be used for buying back debt, alleviating inflation pressures and paying for trade. This is yet another tailwind behind Bitcoin, a tailwind that may have further strength as countries realise this opportunity and scramble to not get left behind.

Like sharks, sovereign countries will find themselves competing to get a piece of the remaining Bitcoin supply. Other big fish like pension funds, state funds and banks (potentially soon to be regulated with FIT21 and SARB 121) are poised to join the feeding frenzy with any available Exchange supply.

Just this week, MicroStrategy announced that they purchased 27,200 BTC for approximately US$2.03 billion. This acquisition was made as part of the company's ongoing strategy to increase its Bitcoin holdings, which now total around 279,420 BTC!

So, what are the takeaways?

The U.S., through a clean sweep of all levels of government, has turned ultra bullish on Bitcoin with proposed mining operations and acquiring 1 million Bitcoin. The destructive influence of the SEC could soon be a painful distant memory. Countries are jumping on board to use their excess or untapped energy within their borders to mine and hoard Bitcoin.

This could quickly turn into game theory with other countries not wishing to miss out and increase world mining efforts. A whole new paradigm or using energy to secure economic prosperity could be playing out. All levels of finance and business are either aggressively buying up supply or getting legislation passed to allow participation and custody.

The tailwinds are real. With liquidity blowing in from the Federal Reserve and other world Central Banks as they drop interest rates to service their sickly, debt-based system, the question remains… Have you set your sails to take advantage of the winds to come?