Is the Bitcoin Boom Benefiting Luxury Goods?

The Trump effect is clearly reflected in the financial markets and cryptocurrency transactions: on Thursday, November 21st, bitcoin broke the 95,000 dollar barrier for the first time, buoyed by the euphoria of the US elections.

While Democratic President Joe Biden supported stronger market regulation, future US President Donald Trump and his adviser, businessman Elon Musk, promised more flexible, cryptocurrency-friendly legislation to boost the market. Since the American billionaire emerged victorious from the presidential election on November 5th, the value of Bitcoin has soared by around +35%, reaching a record high.

Speculators are feverishly awaiting the new measures announced by the incoming Trump administration. Firstly, creating a strategic Bitcoin reserve in the United States could further legitimise cryptocurrencies and influence other countries' tax and financial policies.

To feed this reserve, the Trump administration has a well-thought-out strategy: it is committed to no longer selling the bitcoins in its possession, which are generally the result of seizures made during ongoing court cases. Trump's slogan of ‘making the USA the bitcoin and virtual currency capital of the world’ seems to be winning over investors. It is also quite possible that Gary Gensler, Chairman of the Securities and Exchange Commission, who until now has taken a repressive approach to cryptocurrencies, will soon be replaced.

What are the possible consequences for the world of luxury goods, where interest in virtual currency payments is growing? Yesterday, Printemps—the French luxury department store chain founded in 1865—announced that it had become the first department store network in Europe to accept cryptocurrency payments. The initiative is aimed at boosting the brand's appeal to customers, especially international ones.

A year ago, Italian luxury carmaker Ferrari announced that it would accept cryptocurrency payment for its iconic racing cars. Bitcoin represents a form of wealth resilient to inflation, and the luxury goods industry knows how to adapt quickly to technological developments to maintain its appeal. All these factors now make the presence of virtual currencies in the luxury goods sector unavoidable. The segment of sales of digital works of art and virtual objects using NFTs has already proved its worth. However, auction houses are wary of the ease with which cryptocurrencies can be used. Christie's, Sotheby's and others are bracing themselves for difficulties in the fight against money laundering. Indeed, the line between the traditional financial sector and cryptocurrencies is blurring; these virtual assets tend to be integrated into conventional payment platforms.

Significant works of art, whose value is highly subjective, are being used as stores of value, ideal for storing, moving and exchanging large sums of money. The use of virtual assets can mask abuse for money laundering purposes through legitimate transactions that are difficult to trace.

Therefore, the alliance between the world of cryptocurrencies and the major financial institutions is still in its infancy. If the legislation sought by the new US administration comes to fruition, this relationship could only become closer.