Original | Odaily Planet Daily (@OdailyChina)
Author | Fu Howe (@vincent31515173)
With Trump's unexpected victory in the US election, the global cryptocurrency market is full of expectations for the future policy environment. The market generally believes that the Trump administration will bring new opportunities and development opportunities to the crypto industry, which may not only reduce regulatory pressure, but also provide a more open policy space. The Republican Party's consistent pro-business stance, combined with the Trump team's free market thinking, has made market investors and industry leaders optimistic that the US crypto regulatory attitude will gradually change, thereby injecting new momentum into the industry. With such expectations, the price of Bitcoin quickly rose to $76,400, a record high.
So, how does Trump's election affect the cryptocurrency market? Next, Odaily Planet Daily analyzes from multiple angles, including regulatory trends, the future of Bitcoin, institutional investor expectations, market fluctuations, and DeFi promotion, and collects the views of professionals from all sides.
Changes in the regulatory environment and new policy trends
On the policy front, Trump’s victory has given the cryptocurrency market renewed hope.
The report led by Gautam Chhugani from the Bernstein analysis team pointed out that the Trump administration's inauguration will help accelerate the turnover of senior personnel at the U.S. Securities and Exchange Commission (SEC), and may introduce a new "crypto-friendly" chairman. Republican support for decentralized finance (DeFi), stablecoins and other fields may promote the passage of regulations such as the Digital Commodities Consumer Protection Act. Potential reforms to these policies will help legitimize the crypto market and bring clearer policy guidance to the industry.
Coinbase Chief Legal Officer Paul Grewal expects the SEC's crypto caseload to undergo "significant changes" under the new Trump-appointed chairman, and believes the new administration will revisit all existing crypto cases filed by Gary Gensler and distinguish between which cases are clearly scams and frauds and which are not.
Coinbase CEO Brian Armstrong expressed optimism about this prospect, saying that the Republican-controlled Congress is "the most crypto-friendly Congress ever," and pointed out that this is a great boon to the industry's compliance and security. The new government's policy reforms not only inject confidence into the market, but also accelerate the development of stablecoin issuers such as Circle and Paxos, accelerating their legalization process in the United States.
In addition, people familiar with the matter revealed that the 21st Century Financial Innovation and Technology Act (FIT21) passed by the House of Representatives earlier this year may die due to Trump's victory. FIT21 aims to create a federal framework for cryptocurrency regulation and determine the jurisdictional boundaries of the CFTC and the SEC. However, as the support of cryptocurrency lobbying groups has shifted to more favorable legislation, the promotion plan of FIT21 may be shelved. The source pointed out that since the Republicans control the White House, the Senate, and may even control the House of Representatives, it is a reasonable choice to support a more favorable alternative bill. It can be seen that the new regulatory environment may be more relaxed, providing a good development space for the market.
Bitcoin reserves and market prospects
The positive impact of Trump's election was quickly reflected in the price of Bitcoin. During the election, Bitcoin once exceeded $75,000, setting a new record high.
Bernstein predicts that the price of Bitcoin may rise further to $90,000 in the future and is expected to reach $200,000 in 2025. This expectation is generally recognized by market analysts, especially for institutional investors, the value attribute of Bitcoin as "digital gold" is increasingly valued.
Justin Sun pointed out that Trump’s election may bring a “180-degree change” to the Web3 industry, and believed that Bitcoin’s market performance has not yet fully reflected the far-reaching impact of this policy change. Institutional allocations to Bitcoin will significantly increase and become one of the mainstream financial assets, and this trend may further accelerate in the coming years.
Market volatility and trading opportunities
Analysts have a positive view on market volatility.
Rong Ren Goh, portfolio manager at Eastspring Investments in Singapore, believes that Trump's victory will bring short-term market volatility, which is a new opportunity for traders. These fluctuations mainly come from the market's expectations of whether Trump will fulfill his crypto-friendly promises. In the past four years, the crypto market has experienced many challenges due to regulatory pressure, and external investors' confidence in the crypto industry has gradually weakened. As policy tendencies gradually become clear, market fluctuations may drive investors to re-evaluate their investment strategies in the crypto market, bringing new trading opportunities.
Institutional Investors’ Attitude and Market Inflows
As Trump's policies shift toward being more friendly to the crypto market, institutional investors' interest in the market is also increasing.
James Butterfill, head of research at CoinShares, said that the Trump administration's policy shift will bring a new round of capital inflows to digital assets such as Bitcoin, especially among institutional investors. Although the crypto market has attracted about $29 billion in inflows this year, he believes that this growth still has great potential. In particular, with the improvement of the regulatory environment and policy support, the interest of institutional investors will be further enhanced. Market participants generally expect that with the legalization of the crypto market, digital assets will be more widely accepted and further integrated into the traditional financial system in the next few years.
Bitfinex analysts expect the crypto market to usher in a "new wave of hope" following Trump's election as US president. As the industry expects federal agencies to take a less hostile attitude toward cryptocurrencies, this trend is expected to promote more capital inflows into the Web3 space. "We expect that a large amount of capital will be freed up for use in the crypto space in the short term," the analysts said.
The rise of the DeFi sector and market vitality
Trump's victory may also promote the rise of the native sector of the crypto industry, especially DeFi. The reason is that before Trump's election, his family launched the DeFi project WIFI, which is currently in pre-sale, indicating his attention to the native sector of crypto. Although Trump's victory did not improve the pre-sale of the project, it shows his attention to the DeFi sector.
Rune Christensen, founder of Sky (formerly MakerDAO), posted on social media that Trump’s victory will promote the “real and sustained renaissance” of DeFi, and the possibility of a 10-fold increase in the number of users in the DeFi field will be significantly increased. Christensen pointed out that DeFi is better positioned to benefit from reduced regulatory uncertainty in the United States than other areas of the crypto industry because its decentralized nature is more in line with the free market principles supported by Republicans.
