The long-awaited Trump Bitcoin tweet has materialized, and it came in the form of a scathing, if not draconian, rebuke against the cryptoeconomy.
On July 11th, President Trump tweeted out a late evening thread in which he lambasted cryptocurrencies, calling Bitcoin and its peers “highly volatile and based on thin air” and prone to facilitating illegal activities.
Naturally, his comments caused an immediate explosion of responses on social media, mostly from cryptocurrency proponents defiantly poking back.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
In the second of a trio of tweets, the president added that Facebook’s coming Libra basketcoin would have “little standing or dependability,” being only the latest influential global authority to publicly air major concerns with the social media giant’s coming cryptocurrency.
“If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks,” President Trump said.
In the last of the thread’s posts, the president played up the strength and centrality of the dollar, saying there is “only one real currency in the USA, and it is stronger than ever, dependable and reliable.” How’s that for a shot across the bow!
…and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!
— Donald J. Trump (@realDonaldTrump) July 12, 2019
The tweets come after many in the cryptoverse have been angling for months to meme a Trump Bitcoin comment into existence. However, the President’s Thursday remarks surely aren’t as agreeable as the comments such influencers had in mind.
The main question seems to be why now?
USD Maximalist at the Bully Pulpit
One possible answer is that the president had become aware of comments that Federal Reserve Chairman Jerome Powell had made earlier in the day, wherein Powell had expressed reservations about the Libra and notably characterized bitcoin as a “speculative store of value like gold.”
President Trump has proven to be a potent and vocal critic of Powell’s monetary policies in recent months, so it’s clear he tracks the Chairman’s activities closely.
Powell’s aforementioned cryptocurrency comments came before the Senate Banking Committee on Friday, so one can assume Trump saw news of the testimony as the day progressed and learned of Bitcoin — possibly for the first time.
“Bitcoin…is a speculative store of value like gold.”
— Jerome H. Powell
Chair of the Board of Governors of the Federal Reserve System https://t.co/64rk6XU0G3
— Balaji S. Srinivasan (@balajis) July 11, 2019
Interestingly, during his congressional testimony Chairman Powell — who heads up the central banking system of the U.S. — likened Bitcoin as akin to a digital form of gold:
“Almost no one uses bitcoin for payments, they use it more as an alternative to gold. It’s a speculative store of value.”
That assertion may not have sat well with President Trump, who has been going to bat for the U.S. dollar in recent weeks, arguing for Chairman Powell to use inflation to more aggressively compete with foreign currencies like the euro and the yuan.
China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA. We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many years!
— Donald J. Trump (@realDonaldTrump) July 3, 2019
It’s clear the president has money on his mind, and now it’s clearer yet that he thinks cryptocurrencies aren’t money at all.
But cryptoeconomy stakeholders will say that President Trump simply has an outdated understanding of the concept. Even Supreme Court Justice Stephen Breyer has previously argued before the highest court in the land that “perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency.”
Currency Wars in Our Midst?
President Trump’s recent calls for the Fed to keep interest rates low and to undertake quantitative easing (QE) highlight some of the main selling points of bitcoin: it’s deflationary in perpetuity and immune to the economic or political whims of a single and temporary administration.
And with major countries like China and Russia looking to de-dollarize amid an atmosphere of political distrust, there’s an opening for non-sovereign currencies like bitcoin to make inroads as a reserve currency that isn’t controlled by any lone country.
eToro Risk Warning: 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.