Geopolitics Review Extra - 15th May 2025
The Donald Diaries: Crypto, Asian Currencies, and Recession Odds
Contents
Introduction
Trump’s Crypto Revolution
The Asian Currency Spike - What’s Going On?
Recession Incoming?
Concluding Remarks
Bitesize Edition
Since his first term as President, Trump has flipped 180 degrees on his crypto policy. However, his personal involvement in the crypto sector is causing issues and his pursuit to make the United States a “crypto-capital” will not be without roadblocks. The first roadblocks are already starting to appear.
During the Asian Financial Crisis, we saw Asian nations possess a lack of dollar reserves as they attempted to find more to prevent devaluations of their currencies against the dollar. Today, rather than seeing Asian currencies fall, we’ve seen them rise sharply. Are we seeing the opposite occur today, and are Asian countries ditching dollars?
Finally, one of the most important questions is whether we will see the United States slip into recession. Inflationary pressures remain, but CPI cooled in April. As expected, the cards remain with Jerome Powell. What potential scenarios could unfold on this front over the coming months? I discuss this and much more in today’s post.
Introduction
Today, I’ll continue my dive into how Trump has affected financial markets, namely in the crypto arena and in the recent sharp rises of Asian currencies, before finally exploring if a recession is still on the cards. Let’s dive in.
Trump’s Crypto Revolution
From his campaign, we knew Trump would be big on crypto, a huge flip from his first term. He pledged to turn the United States into the “crypto capital of the planet”. So, what moves have we seen so far in pursuit of this? And more importantly, has Trump hit any roadblocks?
The biggest potential policy that Trump has proposed is a Bitcoin National Reserve. But Trump’s focus isn’t solely on Bitcoin. In March, he posted on Truth Social that a Digital Asset Stockpile should also be created, including XRP, Solana, and Cardano.
In Monday’s post, I discussed the role gold and the dollar could play in a newly emerging financial system. Could Bitcoin have a role to play here, too? A major aim here is to put to use the 200,000 forfeited Bitcoins that the United States has confiscated from crimes. Typically, assets seized by the government are liquidated, and property is almost always sold. When it comes to Bitcoin, these assets have been held, with the U.S. government heavily benefiting from recently rising prices.
On a more personal level, Trump also has involvement in the crypto industry. He controversially issued his own $TRUMP meme coin, with the top 220 holders being invited to an exclusive dinner with the President. This immediately led to worries of corruption and conflict of interest, as one of crypto’s proposed benefits of anonymity could lead to insiders successfully pumping the price of such coins, as we’ve seen countless times before.
Trump’s personal crypto pursuits led to the Democrats blocking the Senate Stablecoin Bill last week, also known as the Genius Act, which previously had bipartisan support. A letter was sent to the U.S. Treasury this week from House Democrats, asking the Treasury’s money laundering watchdog to hand over suspicious activity reports tied to the President, specifically his actions with the $TRUMP meme coin, and his blockchain project, World Liberty Financial. With Trump’s potential violation of finance laws, bribery, and securities regulations, the battle to push the United States to a crypto-capital could be more of a dream than reality.
What can’t be denied is that more companies are entering into partnerships with crypto firms. Also providing tail winds is the positive sentiment proposed by Donald. We may look to Bitcoin for general crypto market sentiment, but many other coins will have immense value in this space and the future of finance. Just this week, we saw that Coinbase will be the first crypto stock in the S&P 500, which boosted its price along with that of Bitcoin, which has once again risen above $100,000. For any successful policies to occur, collaboration between Congress, regulatory agencies, and industry stakeholders will be vital. Crafting functioning, cohesive policies that appeal to all will prove difficult. Crypto-sceptics will always remain, as occurs with any innovations, and so pace will also be important. The SEC and CFTC will both play a large role, and with Gary Gensler out of the SEC, one roadblock has been removed, but Trump seems set on imposing his own.
If we zoom out from the cryptocurrency industry and focus on who this benefits, it firstly benefits Trump. If crypto prices accelerate, then his meme coins and blockchain company will also benefit. Trump has also admitted back in August 2024 that he owned $1-5 million of Ethereum. But, crypto boosts will also benefit those from Trump’s voter base. Typically seen as more of a Wild West gambling casino than investment assets, any price rise in crypto could benefit those from lower-income backgrounds who pursue such risky returns. This has the potential to boost Trump’s support amongst Americans.
However, this is a massively speculative industry. A currency doesn’t fluctuate 20% in a week, but crypto has the potential to do this. This would bring more uncertainty if such a reserve were implemented, and its part in the overall system would have to be carefully managed. Then again, it seems Trump’s middle name could be “uncertainty”, and perhaps that’s exactly what he wants.
The Asian Currency Spike - What’s Going On?
Reuters led with the title, “Asian Crisis in Reverse” as the Taiwan Dollar spiked, the Hong Kong Dollar tested its peg, and the Singapore Dollar soared close to decade highs. So, to flashback to one of my favourite books by Russell Napier, let’s quickly cover what occurred in the Asian Financial Crisis in the 1990s.
The crisis was generally a sequence of currency devaluations that started in 1997 and spread quickly to other Asian nations. Thailand ended the Baht’s peg to the dollar after depleting large amounts of the country’s FX reserves defending the peg from downward pressure. The crisis was rooted in growth policies that were encouraging high investment, but this was often funded via debt. After Thailand let the Baht fall, Malaysia, the Philippines, and Indonesia followed suit in the weeks afterwards. The crisis then spread to South Korea. Hong Kong managed to fend off many speculative moves against its currency due to its peg to the US dollar via a currency board system that is heavily backed by US dollar reserves. But other nations weren’t so lucky. Many affected nations fell into recessions, and bailouts from the IMF and the World Bank alleviated some of the crisis. It was a typical bubble because Asia was seen as the next area of huge economic growth and development, and so capital flooded into the continent. But like all bubbles, they eventually burst, as occurred here.
So, what differences are we seeing in currency moves today?
Keep reading with a 7-day free trial
Subscribe to Geopolitics Explained to keep reading this post and get 7 days of free access to the full post archives.