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The increasing odds of Donald Trump nominating Elon Musk for a cabinet position have resulted in a discussion of the potential implications on the cryptocurrency market.
According to Polymarket, as of September 5, 2024, there is a 21% likelihood of that occurring, which is significantly higher than the 13% seen just one day earlier.
This speculation has come off the back of reports stating that Trump is considering Musk to run a government efficiency commission.
Musk’s involvement in the Trump administration raises one all-important question: How would that change crypto regulation and its institutional adoption?
Trump And Musk: Crypto-Friendly Future?
Musk’s would-be appointment is likely to be a game-changer for the cryptocurrency market. As a strong crypto bull, he has all the levers to influence more friendly regulations.
Joining the Trump cabinet, Musk would be most likely able to craft policies that would advance innovation and institutional adoption of cryptocurrencies.
This will result in a friendlier environment for companies engaging in crypto businesses, which means it would attract more and more companies into incorporating digital currencies into their operations.
I look forward to serving America if the opportunity arises.
No pay, no title, no recognition is needed. https://t.co/5PSNtjBQn7
— Elon Musk (@elonmusk) September 5, 2024
Furthermore, Musk’s focus on renewable energy would boost efforts for sustainable practices in crypto mining. Drawing from his previous work with Tesla and SpaceX, Musk might support regulations that create some incentives for renewable energy sources in mining processes.
This would flip the page on crypto’s environmental impact and also go a long way toward its acceptance by the public, thus making it more palatable to mainstream investors and institutions.
Market Reactions And Speculation
Markets have responded somewhat coolly to the announcements. Since the reports surfaced, tokens connected to Trump and Musk have gone in different directions.
The MAGA Hat token jumped 2.4%; the Elon token leapt 9.5%. By comparison, MAGA, the biggest token with Trump themes, has dropped over 16% during the week. Furthermore rising by more than 4.5% is Tesla’s shares.
In the larger cryptocurrency market, Bitcoin still falls below $57,000; Ethereum is down at $2,400. If anything, over time the performance of cryptocurrencies has shown fortitude against political fortunes.
Bear in mind how Bitcoin reached record highs during both the Obama and Trump regimes. While this means political environments can most definitely impact cryptocurrency market sentiment, they are not sole value drivers.
The Bigger Picture
The stakes are huge for either Trump or Musk as the election draws near. The Trump campaign has been actively courting the crypto community, promising to make the US “the crypto capital of the world”--a utopian ideal that resonates deeply in that demographic, however much the vision remains in vague outline.
While some have been salivating for even the prospect of specific policy proposals, many questions remain unanswered in light of Trump’s recent failure to deliver on a promised crypto initiative.
The excitement generated by Musk’s possible cabinet role may rejuvenate the interest in Trump’s crypto plans, but if and when these materialize into actual concrete actions, nobody can tell.
In other words, Musk could be a pro-crypto appointment that will introduce crypto-friendly regulation and stir a fever of innovation and institutional adoption.
Featured image from Pexels, chart from TradingView
