The Bitcoin price and the broader crypto market surged following Donald Trump’s election victory in November, with the rally gaining fresh momentum in the days leading up to his inauguration on Jan. 20.

Crypto enthusiasts are largely sold on Trump’s image as the industry’s messiah, bolstered by his self-styled role as a champion of pro-crypto policies. But are these hopes grounded in reality, or is the market caught up in make-believe?

During his rousing speech in Nashville last July, Trump made bold promises to transform the U.S. into the crypto capital of the world. To support this vision, he affirmed his intent to establish a Strategic Bitcoin Reserve (SBR).

“We’re gonna do something great with crypto because we don’t want China or anyone else getting ahead,” Trump told CNBC last month.

Now, as initial signs of rising inflation spark fears of an economic crisis, Trump is expected to issue several crypto-related executive orders upon his return to the White House. The incoming administration has already announced plans to loosen regulations, establish a Crypto Presidential Advisory Council—reportedly including around 20 CEOs and founders with strong ties to Trump—to give the industry a voice in government, revoke restrictive policies like SAB 121, and position the U.S. as the global center of Bitcoin mining. 

Crypto cronies

Trump appointed venture capitalist and podcast host David Sacks as the country’s first artificial intelligence and crypto czar.

As part of the weekend inauguration celebration, Sacks hosted a crypto ball at the Andrew W. Mellon Auditorium in Washington, D.C., on Jan. 17. The event was co-hosted by BTC Inc., Stand With Crypto, Exodus, Anchorage Digital, and Kraken. Sponsors included MicroStrategy, MetaMask, Coinbase, Solana, Galaxy Digital, Kraken, and others. 

According to the New York Post, the president-elect is reportedly considering an ‘America-first’ crypto reserve strategy that would include Bitcoin as well as U.S.-founded digital assets like XRP and Solana.

Whether Trump’s own meme coin (TRUMP), now with a market cap of about $13 billion, would be included in that reserve.

The Solana-based meme coin is currently $21, according to data from CoinGecko. The coin debuted with 200 million tokens in circulation out of a total supply of 1 billion, with the remaining supply set to be gradually released over the next three years.

It reached a high of $73.43 and currently hovers at around $66 at the time of writing.

Based on data from analytics company Arkham, the U.S. government currently holds nearly $20 billion worth of Bitcoin, seized in various law enforcement actions. This portfolio includes 198,109 BTC, valued at approximately $20.63 billion, along with other digital assets such as 54,753 ETH ($189.03 million), 122.13 million USDT ($122.13 million), and 750.722 WBTC ($77.77 million).

The government’s current holdings also feature Binance Coin (BNB), Aave (AAVE), USD Coin (USDC), and others.

Analyzing the potential impact of these developments on the cryptocurrency market, it’s reasonable to expect the market to continue to grow.

The creation of a crypto reserve signals strong governmental support for Bitcoin as a store of value and a strategic asset. Similar to previous institutional adoption events, such a move could increase Bitcoin demand, and reduce market supply. As a result, it might start a global domino effect, with more governments adopting similar strategies and sending demand up.

Speaking of exact price targets, Bitcoin’s price could experience a rally similar to previous institutional adoption events, with the potential to reach $120,000–$150,000 within six to 12 months, depending on market sentiment and macroeconomic factors.

Prioritizing U.S.-founded assets like XRP and Solana could enhance the adoption of these crypto projects on a global scale. XRP and Solana could rally by 30–50% in the short term, depending on the specifics of the strategy. Regarding the decision to launch the TRUMP meme coin just days before the inauguration, it appears to be a strategic move aimed at reinforcing Trump’s pro-crypto stance and arousing a sense of excitement among his supporters.

An overlooked consequence might be the government stepping into areas traditionally outside its purview. Although framed as deregulation, top-down crypto policies are inherently regulated, which contrasts with the crypto community’s core values of decentralization.

Also, if deregulation is indeed the goal, how will consumer protections be ensured? Striking this balance is a Herculean task. From my experience leading Outset PR, I’ve seen firsthand how even well-intentioned policies can create friction between innovation and oversight. Moreover, political promises often stall or face roadblocks before becoming a reality. If these initiatives are not executed efficiently, the market’s response may be lukewarm.

Closing Thoughts

Crypto market enthusiasts have reason to be excited—the proposed policies could significantly boost adoption and valuation.

Crypto’s biggest stumbling block has long been the government, but if alignment between policymakers and the industry can be achieved, the potential for growth is very promising.

However, as is always the case in the crypto market, execution and external factors will ultimately determine the scale and sustainability of this growth.