Trump’s Crypto Revolution: Tax-Free Gains on XRP, ADA, and ALGO? How to Maximize Your Profits

Bitcoin (BTC) established new all-time highs above US$106,000 on December 15th after threatening to on multiple occasions in the last week. The Xmas price push has been driven by positive comments made about the crypto sector by US President-elect Donald Trump when he rang the opening bell at the New York Stock Exchange on Thursday. 

There was already strong BTC price momentum leading up to Trump’s NYSE appearance, this was boosted when he said —“We’re going to do something great with crypto because we don’t want China, or anybody else… but others are embracing it and we want to be ahead.” When asked directly whether this would potentially mean setting up a BTC strategic reserve similar to the US oil stockpile, Trump answered “Yes, I think so. That’s still on my mind.”

On Sunday, further fuel was added to the fire. Strike CEO Jack Mallers said on a podcast released over the weekend, that he believed Trump could potentially execute an executive order designating BTC as a reserve asset on his first day in office on January 20th.

Also, early in the week, Donald Trump’s son Eric Trump appeared to confirm rumors that his father’s administration is planning to make profits on Cryptocurrencies issued by US companies capital gains tax-free. This would make all profits Americans make on holding crypto assets like Cardano (ADA), Algorand (ALGO), and XRP (XRP) fully tax-free because their creators are US-based companies.

There is also a suggestion there will be a path for businesses with existing crypto to relocate to the United States. This strategy is believed to be a part of a wider goal of the Trump administration to make the USA the crypto capital of the world. For investors the messaging is clear – “buy American” for tax reasons if for nothing else. 

The final bullish trigger for BTC’s push towards new all-time highs was the European Central Bank cutting benchmark interest rates by 25 basis points which came with a dovish monetary policy statement that implied that more reductions were set to come in the future. On December 17th-18th the US Federal Reserve will meet to make its final interest rate decision of 2024. Currently, the CME Fedwatch tool places the probability of a 25 basis point cut at the next Fed meeting at around 96%. This would put the Fed Target rate at 4.25%-4.50%. It has been sitting above 5% for most of 2023-2024. 

Lower interest rates tend to favor investing or saving. Capital becomes cheaper and saving becomes less appealing. BTC has historically performed better in lower-interest environments.

In the last week, crypto wallets connected to the Trump-family-backed World Liberty Financial project purchased millions of dollars worth of well-established, major cryptocurrencies. 

World Liberty Financial is a decentralized finance platform that offers users the ability to borrow, lend, and create liquidity pools with digital assets. WLFI holders will have the right to vote on the strategic direction of the platform. US President-elect Donald Trump 2024 is listed as the project’s chief crypto advocate. His sons Eric and Donald Jr. are listed as web3 advisors. His youngest son Barron is listed as “DeFi visionary,” indicating that World Liberty Financial is a family affair.

Onchain forensics company Lookonchain reported on Thursday that World Liberty Financial purchased millions of dollars worth of Ether (ETH), Aave (AAVE), and Chainlink (LINK). Each asset received a boost of momentum following news of the purchases. The wallet has also spent US$30 million to buy 8,105 ETH at an average price of US$3,700 over the first 12 days of December. 

It has been reported that World Liberty Financial is using onchain oracle Chainlink to improve its connectivity with the wider crypto ecosystem and will use its services for pricing data and cross-chain interoperability. 

Last week, the DAO managing the platform proposed deploying a World Liberty Financial Aave V3 instance. This would be managed by external risk managers using Aave V3 infrastructure and will be released on Ethereum. An instance refers to a specific or catered version or deployment of a protocol or service launched on a blockchain network. The proposal has been heavily supported and has already hit its quorum. The aims of the Aave V3 version of World Liberty Financial include attracting new first-time users to the platform.