Bitcoin Is Feelin' the Trump Love. Can It Last? — Barrons.com

By Joe LightBitcoin and crypto stocks famously trade on vibes, and the vibes in the past day have been undeniably good with a major assist from President Donald Trump. But the rally is premature.In the past 24 hours, Bitcoin has soared more than 10% to $71,655. On Thursday, two of the biggest crypto names popped. Coinbase Global, an exchange platform, was up 6.6% and Bitcoin treasury company Strategy rose 5.9%.A couple catalysts on Wednesday caused the moves. First, Treasury Secretary Scott Bessent announced that his department would double buybacks for long-duration Treasuries-at least temporarily lowering bond yields and helping Bitcoin and other risky assets.At least part of Bitcoin's rapid run-up was also because of short covering. More than $1.2 billion of Bitcoin short positions and another $800 million in Ethereum positions liquidated during the rally, according to Fundstrat.On Thursday, Treasury yields rebounded to levels before Bessent's announcement and stocks gave up their gains, though Bitcoin kept climbing.Bitcoin's strength suggests at least part of the run-up is because of the second catalyst: essentially a pep rally event thrown by Trump and top crypto executives to promote digital assets and encourage Congress to pass the Clarity Act, an industry-friendly bill.That should give crypto investors pause.It's Democrats, not Trump or Republicans, who are the major roadblock to passing the Clarity Act.Executives from Coinbase and others have clamored for the bill, which would put most trading outside the purview of securities laws, in part to prevent crackdowns similar to those under the Biden administration.Trump is really why the Republican-led Senate took up the bill in the first place, but he may also be the reason why Democrats block it when it comes to a procedural vote on Sept. 15.To avoid a filibuster, the bill needs at least 60 votes. At least two Republicans are expected to vote no, which would mean nine Democrats would need to sign on.Earlier this year, the president disclosed that he made more than $1 billion from his crypto-tied investments, including World Liberty Financial. Democrats have fought for the Clarity Act to include a provision requiring Trump to divest or at least limit his crypto dealings.To that end, the pep rally isn't going to help bring a deal together.Many of the attendees included Republican megadonors, such as Gemini Exchange founders Cameron and Tyler Winklevoss.The crypto industry helms one of the largest crypto super PACs in the country and Democratic crypto support was tied at least in part to fear that the money could be deployed against them.Crypto executives rallying behind Trump will probably cement the idea with some Democrats that the industry will to support the GOP regardless."This doesn't raise the chances that Clarity gets done," said Owen Tedford, an analyst with Beacon Policy Advisors. "This is just driving home to the crypto industry the idea that 'We, as Republicans, are here for you.'"The vibes are good for now. But falling short on passing the Clarity Act could sour the mood fast.Write to Joe Light at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.