The increasing likelihood that Donald Trump will nominate Elon Musk for a cabinet position has sparked debate over the potential implications for the crypto market.
According to Polymarket, there will be a 21% probability of that percentage, which is significantly higher than the 13% seen just one day earlier.
This speculation is based on reports that Trump is considering Musk to run for president. Commission for Government Efficiency.
Musk’s involvement with the Trump administration raises one important question: How would it change cryptocurrency regulation and institutional adoption?
Source: Polymarket
Trump and Musk: Crypto-Friendly Future?
Musk’s potential appointment is likely to be a game-changer for the crypto market. As a strong crypto bull, he has the power to influence friendlier regulations.
Joining Trump’s cabinet, Musk could most likely develop policies that promote innovation and institutional adoption of cryptocurrencies.
This will result in a more favorable environment for businesses dealing with cryptocurrencies, meaning that more and more companies will be inclined to incorporate digital currencies into their operations.
I look forward to serving America when the opportunity arises.
There is no need for a salary, no title, no recognition. https://t.co/5PSNtjBQn7
— Elon Musk (@elonmusk) September 5, 2024
Additionally, Musk’s focus on renewable energy could boost efforts to promote sustainable practices in crypto mining. Building on his previous work with Tesla and SpaceX, Musk could support regulations that create incentives for renewable energy sources in mining processes.
This would revolutionize crypto’s environmental impact and also go a long way toward increasing its acceptance by the public, making it more attractive to mainstream investors and institutions.
Market reactions and speculation
Markets have reacted rather coolly to the announcements. Since the reports came out, tokens tied to Trump and Musk have gone in different directions.
The MAGA Hat token rose 2.4%; the Elon token rose 9.5%. In comparison, MAGA, the largest Trump-themed token, fell over 16% during the week. Further, Tesla shares rose over 4.5%.
In the larger cryptocurrency market, Bitcoin still under $57,000; Ethereum has fallen to $2,400. Cryptocurrency performance over time has shown itself to be resilient to political upsets.
Keep in mind how Bitcoin reached record highs during both the Obama and Trump administrations. While this means that political environments can definitely impact crypto market sentiment, they are not the only determinants of value.
The bigger picture
The stakes are high for either Trump or Musk as the election approaches. Trump’s campaign has actively reached out to the crypto community, promising to “the crypto capital of the world”--a utopian ideal that deeply resonates with that demographic, although the vision is still vague.
While some are eagerly awaiting specific policy proposals, many questions remain unanswered after Trump recently failed to deliver on a promised crypto initiative.
The excitement generated by Musk’s potential cabinet role could revive interest in Trump’s crypto plans, but whether and when they will actually lead to concrete actions is anyone’s guess.
In other words, Musk could be a pro-crypto appointment who will introduce crypto-friendly regulations and fuel a wave of innovation and institutional adoption.
Main image from Pexels, chart from TradingView