01 Jul Implications of the 2024-2025 Cryptocurrency Bull Run on Global Monetary Policies

Mohamed Omar Ata Daoud Nazer

IE School of Economics, Politics & Global Affairs, IE University, Madrid, Spain

E-mail: mnazer.ieu2022@student.ie.edu

Abstract

The recent surge in cryptocurrency popularity is undoubtedly one of the most talked-about subjects in today’s economy, with the crypto market capitalization exceeding $3 trillion. This would trigger central banks and policymakers to adapt to the digital asset’s playground. The 2024-2025 so-called cryptocurrency bull run saw Bitcoin reach record highs, with such assets being used in several nations’ financial reserves. This research examines how climbing crypto-asset values have influenced monetary policies around the world. I found that cryptocurrencies’ rapid growth has spurred central banks to push this crypto agenda into play and to tighten the oversight on these assets, despite cryptocurrencies remaining a relatively exogenous factor to traditional monetary policy channels. In the United States, it has been observed that President Donald Trump has accelerated the implementation of a crypto-friendly regulatory regime and reinforced a bullish market environment, with the initiation of policy shifts such as the U.S. Bitcoin reserve. Officials in Europe have begun to double down on plans for a digital euro to preserve monetary sovereignty amid private crypto proliferation. Emerging markets are taking measures such as bans on crypto transactions and fast-tracking central bank digital currencies (CBDCs) due to facing risks of ‘cryptoization’ of their economies. Figures like Elon Musk possess outsized influence, which has led to the roiling of the crypto market, even from the slightest of his pronouncements. Musk has added an unconventional layer to monetary policy considerations, as central banks weigh the market volatility and public enthusiasm driven by such actors. My analysis scopes recent academic literature and policy reports to show that although crypto markets do not yet dictate central bank rate-setting, they have expedited some sort of reconstruction of monetary frameworks. A lasting contribution of the bull run to global monetary policy includes regulatory clarity and better integration of digital currencies in financial systems that preserve central bank control over this decentralized setting.

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Keywords: Bitcoin, Cryptocurrency, Central Bank Digital Currencies (CBDCs), Stablecoins, Donald Trump, Bull Run, Boom