There is a way that President Donald J. Trump (R-New York) can cause the price of cryptocurrencies like Bitcoin, Ether and Litecoin to double. He can declare the $100, $50 or $20 bills worthless, or stop printing them.
Such demonetization is more possible than many people think; on November 8, 2016, Indian Prime Minister Narenda Modi declared the two largest bills in his nation the 500 and 1,000 rupee notes worthless. Modi simply went on television and told voters that their money was now valueless.
Interestingly enough Modi was simply implementing a suggestion from one of the world’s most prominent monetary thinkers; Kenneth S. Rogoff, a former chief economist for the International Monetary Fund. Last year Rogoff published a book called The Curse of Cash: How Large-Denomination Bills Aid Crime and Tax Evasion and Constrain Monetary Policy“ in which he recommended that paper money be abolished completely.
An Argument that will Appeal to Trump
Rogoff’s argument is that paper money encourages all manner of illicit activity including terrorism, illegal immigration, drug smuggling and tax evasion. Rogoff thinks that getting rid of cash will make it harder for terrorists, drug smugglers, gangsters and tax evaders to do business.
In his speech justifying demonetization Modi echoed Rogoff’s arguments by claiming he was “fighting terrorism.” Such sentiments are likely to appeal to Trump and some of the law and order Republicans around him; such as Attorney General Jeff Sessions.
Trump can also claim he is being fiscally responsible and saving tax payers money by abolishing the printing of paper money. That would certainly appeal to some Republicans and to techno Libertarians such as Trump’s friend Peter Thiel and his son in law and chief advisor Jared Kutchner.
Trump does not Have to do it to Double Cryptocurrency Values
Interestingly enough, Trump does not have to actually abolish the $20, $50 and $100 bills to double cryptocurrency prices. All he has to do to float the idea, even if Congress kills it the damage will be done.
Even speculation that the Donald is planning to take such action might cause bitcoin to double from around $2,380.20 to $4,760.40; ethereum to double from around $236.34 to $473.628, and Litecoin to increase from $36.21 to $72.42. Note these prices are based on those found at Coinbase on June 26, 2017; please check Coinbase for current prices. That will take cryptocurrencies mainstream because people fearing their cash is about to disappear will rush to them much like they did in China.
The biggest winners will be speculators like the Winklevoss Twins and Hedge Fund maverick Mike Novogratz. Novogratz revealed that he had 10% of his money in bitcoin and ethereum in an April 19, speech at the Harvard Business School of New York. The twins invested $11 million in bitcoin in 2013 and are trying to launch a bitcoin exchange-traded fund.
Speculators and investors need to watch the news from the White House carefully because Donald J. Trump has the ability to launch the biggest bitcoin bubble yet. If he does a lot of cryptocurrency Geeks like Mike Tyson are going to get very rich very fast.