Not a single day passes when President Trump is not in the news. He is a great waller, a banisher of the Muslims or simply a raving lunatic. It basically all depends on who you ask. Will Trump’s moves benefit Bitcoin and Blockchain?
One particular move- immigration and restriction on movements may have immediate effects on Blockchain’s future but other Trump’s policies will put their mark on the crypto world as well.
The stupid f**king wall
Vicente Fox, former president of Mexico described President Trump’s wall just in those straight terms. If the wall comes up and U.S.-Mexico relations hit a sour note, it will immediately affect border towns on both sides of the U.S.-Mexican border. Then it will go beyond.
The Financial Times, for example, highlighted the Trump impact on real estate purchases in California and Florida, they cited the National Association of Realtors as saying, “the percentage of Mexicans buying homes in the U.S. fell from 7.9 percent of international sales in 2012 to 4.6 percent last year.”
Mexico is the United States' second largest export market and the third-largest supplier of imports. In 2016, the United States recorded a $59 bln trade deficit with Mexico. If Trump were to tax Mexican goods in order to recover the cost of the wall, Texas alone would be hit hard. As the Republican Politician from Texas Rube O. Villareal tweeted:
The dollar’s status in doubt
President Trump’s Muslim ban or rather what is being marketed as one but in reality may not be the one technically is also raising questions.
While none of the countries that have been shortlisted for the “ban” are significant contributors of terrorist activities in the United States, countries that have been left out have posed a bigger threat in the past. What is more worrying is the impact that this ban will have in terms of ramifications. One of the countries on this travel ban list is Iran, which happens to produce 5.1 percent of the world’s oil. The Central Bank of Iran has decided to ditch the dollar in a separate development. Iran’s Financial newspaper the Financial Tribune reported the central bank governor Valiollah Sief as saying, "Iran's difficulties in dealing with the dollar were in place from the time of the primary sanctions and this trend is continuing but we face no limitations regarding other currencies."
Should Trump significantly anger the Muslim world, then the U.S. dollar’s status as the reserve currency of the world would come under a cloud of doubt. In fact, his “Muslim Ban” has already sent the dollar into a tailspin especially against the Yen, which acts as a sort of security blanket traditionally.
China is ditching the dollar
President Trump has been hard on China. He has called the Asian giant as a currency manipulator and has also decided to be more proactive in the matters related to the South China Sea.
This has lead to considerable stirring in Beijing, which also happens to own a large part of the United States debt.
The Chinese have been dumping these U.S. bonds in the wake of President Trump’s statements. A lot of the dumping of the U.S. debt has been to shore up the flailing Yuan. CNN Money observed:
“Since May, the value of China's Treasury holdings has dropped by nearly $195 bln. Japan passed China in October to become the largest foreign owner of U.S. debt.”
Interestingly Japan too has been jettisoning the United States debt while Russia, Brazil, Saudi Arabia and the United Kingdom have been piling it on. Trump’s policies, indeed will push the United States further into debt and as the U.S. Committee for a Responsible Federal Budget observed the U.S. debt would rise to 129 percent of the GDP by 2026.
Add to this the seeming end of the bond bubble as major economies ditch the United States debt and Trump’s treasury buyback plans. Chances of the dollar coming under pressure in the future are quite high.
India immigration concerns
In India, the greatest worry about Trump is his stance on immigration especially U.S. H1B visas. These visas are crucial to India’s Information Technology industry. In an interview with the Economic Times, R Chandrashekhar, the President of Nasscom, India’s IT public policy body outlined his views on Trump’s visa plans:
“If any of this materializes then certainly companies will have to deal with that. We do believe that the U.S. economy as a whole has a skill shortage in the stem area and in particular skill shortage in the IT related area. It is a reality given that by 2018 that shortage is only going to increase and there will be at least one million unfilled jobs because there are no people with those skills available.”
Trump effect on Bitcoin and Blockchain
Trump will have both a positive and negative effect on both Bitcoin and Blockchain. Bitcoin may actually stand to gain as Trump systematically destroys the U.S. economy.
Trump’s actions on China and the Muslim world will have significant economic reprisals and the end of the U.S. dollar as a reserve currency may be hastened. Many will advocate the adoption of Bitcoin and other currencies as reserve currencies instead.
The impact of immigration curbs may be negative as Silicon Valley and other border areas of the United States are significant IT hubs. The lack of labor will have immediate effects on the development of new projects, particularly by start-ups. The effect may moderate with the passage of time as domestic talent is developed.
Alternatively, the immigration ban may be even more a part of the industry abroad where the visa restrictions maybe fewer. As we have seen in the first few days of the Trump presidency, his habit of issuing decrees causes significant upheavals and upsets.
Bitcoin in these times may act as digital gold and can be a storehouse of value and stability as it is unaffected by government policy and action.
Overall, it is a not a bad time to be in Bitcoin but Trump is good for Bitcoin and Blockchain in the same way the eruption of the Yellowstone Caldera is.