1. Introduction
On November 6, the dust of the US presidential election settled and Donald Trump was successfully elected. This result has attracted widespread attention globally, especially in the cryptocurrency space. In the past few years, the cryptocurrency regulatory environment in the United States has been relatively strict and uncertain, and Trump's re-election is considered to be an opportunity for a major turning point in U.S. encryption policy. Trump repeatedly expressed his support for cryptocurrency during the campaign, promising to make the United States the "global cryptocurrency capital" and proposing policy proposals such as establishing a national strategic Bitcoin reserve.
Expectations for the improvement of a series of encryption policies after Trump's election have made investors full of expectations for the future of the encryption industry. The cryptocurrency market has risen significantly in a short period of time. Bitcoin has been soaring all the way. This week, the price exceeded 90,000 US dollars. Other cryptocurrencies It also ushered in a general rise in the market. This article aims to analyze the potential impact of Trump’s election on U.S. cryptocurrency policy, as well as predictions of market trends, and provide corresponding investment strategy recommendations.
2. Trump’s Cryptocurrency Policy Commitments
During the 2024 U.S. presidential campaign, Trump showed a more active and open attitude on cryptocurrency policy than Democratic candidate Kamala Harris, and proposed a series of proposals aimed at promoting the development of cryptocurrency. policy commitments.
1. Attitude change: from skepticism to support
Back in 2019, Trump tweeted that he was "not a fan of cryptocurrencies" and considered them "not a currency," citing their wild price fluctuations and lack of reliability. He also criticized Facebook's Libra project, stressing that it has "little status or credibility" and suggesting that U.S. regulators would oversee it.
However, entering 2024, Trump's attitude has changed significantly. He began expressing support for cryptocurrencies in public, emphasizing their potential in the future financial system. This shift may be influenced by multiple factors, including the rapid development of the cryptocurrency market, increasing public acceptance of digital assets, and changes in the political environment.
2. Supportive remarks and statements during the campaign
May 9, 2024: Statement at the NFT dinner
At an NFT dinner held at Mar-a-Lago, Trump said: "If you support cryptocurrencies, you vote for Trump because they (the Biden administration) want to end it." When asked about his views on When asked about central bank digital currencies (CBDC) and "government blockchain," Trump responded: "I think it all has its place." He continued: "We have some incredible things going on, and I I mean, looking back at cryptocurrency a few years ago, people said it wasn't going to be successful, but now it's in record numbers I guess you could say it's a form of currency and I think I support that, I'm getting more and more. Support this.”
May 28, 2024: Bitcoin and the National Debt Problem
David Bailey, CEO of Bitcoin Magazine and a cryptocurrency aide to the Trump campaign, revealed that Trump had asked whether Bitcoin could be used to solve the U.S. national debt problem. The remarks showed Trump’s interest in the potential role of cryptocurrencies in the macroeconomy.
June 8, 2024: Commitments at Fundraiser
At a fundraiser in San Francisco, Trump said he would be a "crypto president" and pledged to halt Biden and Securities and Exchange Commission (SEC) Chairman Gary Gensler's comments within an hour of his second administration taking office. Cryptocurrency crusade. He emphasized that more friendly regulatory policies will be adopted to support the development of the cryptocurrency industry.
July 28, 2024: Speech at Bitcoin Conference
At the Bitcoin Conference in Nashville, Trump said that he would build the United States into the "cryptocurrency capital of the earth" and the "Bitcoin superpower of the world." He also promised to fire current SEC Chairman Gary Gensler on his first day in office, saying: “Bitcoin may be our last line of defense against CBDC, and it will help us dominate the energy field.”
3. Crypto industry-related actions during the campaign
Accept cryptocurrency donations
In May 2024, Trump’s campaign announced that it would accept cryptocurrency donations, and supporters could donate using a variety of cryptocurrencies through the Coinbase Commerce platform. This move shows Trump’s openness to cryptocurrencies and hopes to attract more cryptocurrency supporters.
Participate in Bitcoin transactions
In September 2024, Trump used Bitcoin to purchase a burger and beer at a bar in New York City that accepted Bitcoin payments, becoming the first U.S. president to use Bitcoin for transactions. He said the payment process was "very simple" and praised Bitcoin's convenience. The move is seen as a symbolic move towards his support for cryptocurrencies.
Launch NFT project
Trump launched multiple NFT projects during the campaign, including the “Trump Digital Trading Card,” to further demonstrate his support for cryptocurrency and blockchain technology. These NFTs have received positive responses in the market, demonstrating his influence in the digital asset field.
Interaction with the cryptocurrency community
Trump actively participates in activities in the cryptocurrency community, including attending Bitcoin conferences and meeting with cryptocurrency entrepreneurs. He emphasized the importance of cryptocurrencies on these occasions and promised that under his leadership, the United States would become a global leader in cryptocurrencies.
4. Encryption policy commitment inventory
Establishing a National Bitcoin Reserve
Trump has promised to establish a national Bitcoin reserve if elected, retaining all Bitcoin held by the government as part of the National Strategic Reserve. He believes that Bitcoin has long-term value-added potential and the government should hold and utilize its value.
Formation of Cryptocurrency Advisory Board
Trump has repeatedly stated that if he is re-elected as president, he will fire current SEC Chairman Gary Gensler, appoint regulators that are more friendly to cryptocurrency, and establish a Bitcoin and Cryptocurrency Presidential Advisory Council to be responsible for formulating and implementing policies that are beneficial to the cryptocurrency industry. Develop policies to ensure America’s leadership in this field.
Opposition to Central Bank Digital Currencies (CBDC)
Trump has made it clear that he opposes the issuance of CBDC by the United States, believing that it will lead to excessive monitoring of citizens’ financial activities and invade personal privacy. He emphasized that the government should not control or monitor citizens’ financial transactions and supported individuals’ right to autonomous custody of their digital assets.
Support Bitcoin mining
He stated that he will defend the right to mine Bitcoin, believing that it will not only help the development of cryptocurrencies, but also promote innovation and growth in the energy field. He pointed out that Bitcoin mining can help stabilize the energy supply of the grid and bring economic and environmental benefits.
Develop a comprehensive cryptocurrency policy
Trump promised to develop a comprehensive cryptocurrency policy covering everything from stablecoin regulation to Bitcoin self-custody to ensure the United States’ leading position in the field. He emphasized that the government should provide clear guidelines for the cryptocurrency industry to promote innovation while protecting consumer rights.
Reduce the sentence of Silk Road founder Ross Ulbricht
Trump pledged at the Libertarian Party's national convention in Washington, D.C., to commute the sentence of Silk Road founder Ross Ulbricht on day one if he were re-elected president. He believed that Ulbricht’s case reflected the government’s excessive suppression of cryptocurrency and promised to take a more impartial attitude towards similar cases.
3. Current status, problems and possible changes of cryptocurrency regulation in the United States
1. Current regulatory agencies and their functions
Cryptocurrency regulation in the United States involves multiple agencies, mainly including:
Securities and Exchange Commission (SEC): Responsible for regulating projects that treat cryptocurrencies as securities, especially activities such as initial coin offerings (ICOs), that the SEC recognizes many cryptocurrency projects as securities and requires them to comply with corresponding securities laws and regulations.
Commodity Futures Trading Commission (CFTC): Treats cryptocurrencies such as Bitcoin and Ethereum as commodities and regulates their derivatives markets. The CFTC oversees derivatives such as cryptocurrency futures and options to ensure market fairness and transparency.
Financial Crimes Enforcement Network (FinCEN): Under the Treasury Department, it is responsible for enforcing anti-money laundering (AML) and know-your-customer (KYC) policies, requiring cryptocurrency exchanges and wallet service providers to comply with relevant regulations to prevent illegal activities.
Internal Revenue Service (IRS): Treats cryptocurrencies as property, requiring taxpayers to declare their holdings and transactions and pay corresponding taxes.
2. Problems with the current regulatory system
Regulatory fragmentation: The fragmentation of responsibilities of different regulatory agencies in the United States has led to fragmented regulation of the cryptocurrency industry. The SEC and CFTC are at odds over how to define cryptocurrencies as securities or commodities, making it difficult for companies and investors to understand the regulatory boundaries of their respective assets.
Lack of a clear legislative framework: Although agencies such as the SEC and CFTC regulate cryptocurrency in their respective fields, the United States still lacks a comprehensive cryptocurrency legislative framework to provide clear legal guidance for this field. Many projects spend significant resources ensuring compliance before launching in the United States, and this uncertainty has led some projects and companies to choose to relocate to countries with more friendly regulatory environments.
Restricting innovation and market competitiveness: The SEC implements strict securities supervision on crypto projects, and the CFTC also has certain restrictions on commodity supervision. Overly strict regulations have a stifling effect on innovation, making it more difficult for U.S. cryptocurrency companies and entrepreneurial projects to develop.
Tax complexity: The IRS’s tax requirements for cryptocurrency transactions are complex, especially when cryptocurrencies fluctuate frequently, making it difficult for users to report accurately. For many ordinary users, this tax complexity increases the cost of cryptocurrency transactions and limits market activity.
3. Possible changes brought about by the Trump administration
After Trump is elected, the U.S. cryptocurrency regulatory environment may undergo the following changes:
Loose regulatory environment: The dismissal of the current SEC chairman and the change of leadership may lead to a change in the SEC's regulatory attitude towards cryptocurrency, relax supervision of cryptocurrency projects, and encourage innovation.
Make policy formulation more inclusive: The establishment of a cryptocurrency advisory committee may make the policy formulation process more inclusive, absorb industry opinions, and formulate regulatory policies that are more in line with market needs.
Increased market confidence: The establishment of a national Bitcoin reserve shows the government’s recognition of Bitcoin, which may enhance market confidence and attract more investors to the cryptocurrency market.
Enhanced privacy protection: Opposing the issuance of CBDC may protect citizens’ financial privacy and avoid excessive government monitoring of personal financial activities.
Accelerated industry development: Supporting Bitcoin mining and cryptocurrency innovation may promote the development of related industries and enhance the competitiveness of the United States in the global cryptocurrency field.
4. Market reaction since Trump’s election
1. Cryptocurrency prices soar
After Trump was elected, the cryptocurrency market reacted quickly, especially the price of Bitcoin, which broke through a record high after the election results were announced. It reached $75,000 that day and exceeded $90,000 within a week. This increase reflected the market's response to Trump. Positive expectations for crypto policies and investors’ optimism about the future economic situation. Cryptocurrency assets such as Ethereum, Solana, and Meme coins have also risen accordingly. The total market value of the entire crypto market has increased by 26% in a week. As of November 14, the total market value of crypto assets has exceeded US$3 trillion.
Source: https://coinmarketcap.com/charts/
2. Investor sentiment is generally optimistic
Investor sentiment was generally upbeat, with many cryptocurrency industry leaders and investors expressing support for Trump’s election on social media. Microstrategy founder Michael Thaler even called Trump the "Bitcoin President" and said that this victory marked the coming of spring for the cryptocurrency industry. Coinbase CEO Brian Armstrong also welcomed “the most crypto-friendly Congress in the history of the United States.” This positive market atmosphere has undoubtedly enhanced investor confidence. Market sentiment has swung from neutral to extremely greedy this week.
Source: https://coinmarketcap.com/charts/fear-and-greed-index/
3. Crypto-related stocks and ETFs rise
Crypto-related stocks and ETFs performed positively on expectations of Trump's policies. In terms of exchanges, major compliance exchanges such as Coinbase and Robinhood have experienced significant growth. Affected by Trump's advocacy of developing Bitcoin mining in the United States, mining companies such as Cipher Mining, Riot Platforms and Canaan Technology ADR have also experienced substantial growth. Beginning on November 6, the U.S. Bitcoin Spot ETF and Ethereum Spot ETF have continued to experience substantial net inflows.
Source: https://coinmarketcap.com/etf/
Micro Strategy (MSTR), a major Bitcoin holding, rose about 13.2%. On November 12, MicroStrategy founder Michael Saylor posted on social media that MicroStrategy’s capital operations achieved a BTC return rate of 26.4% this year, bringing shareholders a net income of approximately 49,936 BTC. This equates to 157.5 BTC per day without the operating costs or capital investments typically associated with Bitcoin mining.
Source: https://x.com/saylor/status/1856321148373393786?s=46&t=bcMyidYO0QkS5ajIW9CBdg
5. Analysis of subsequent trends in the encryption market
1. Short-term trends
Market reaction: After Trump was elected, the cryptocurrency market rebounded rapidly, especially the prices of mainstream digital assets such as Bitcoin and Ethereum rose significantly. The market is full of expectations for Trump's policy commitments. This price movement reflects investor optimism about future policies, and the crypto market is expected to continue to be driven by positive sentiment in the short term. According to predictions, in the short term, the price of Bitcoin may exceed US$100,000 before the end of 2024, and some analysts have even given an expectation of US$150,000.
Investor sentiment: Investors generally believe that Trump’s election will bring about a more relaxed regulatory environment and favorable economic policies. This optimism may lead to more funds flowing into the crypto market, and speculative trading in particular may increase.
Increased trading activity: As market sentiment rises, trading activity may also increase significantly. Investors will become more actively involved in cryptocurrency trading, especially as policy uncertainty increases, and speculative trading may become dominant. This situation will lead to increased market volatility, and prices may fluctuate violently in the short term.
2. Mid- to long-term trends
Policy implementation and industry development: In the long term, whether the Trump administration can fulfill its commitment to cryptocurrency will directly affect the development of the industry. If Trump can successfully implement relevant legislation, such as the Financial Innovation and Technology Act of the 21st Century (FIT21) and the Payment Stablecoin Act, the United States is expected to become the global leader in cryptocurrency. These policies will provide a clear regulatory framework for the industry, thereby attracting more companies and investors to enter the market.
Technological innovation and capital inflows: The Trump administration is expected to support financial technology innovation, including the development of blockchain technology and digital currencies. This could take the form of increased R&D funding, stronger patent protection, and collaboration with the private sector. As more capital flows in, cryptocurrencies' status as safe-haven assets may also grow, further boosting the market.
3. Potential risks and challenges
Policy uncertainty: Although Trump has promised to support cryptocurrencies, if Trump fails to effectively implement his promises or new regulatory measures emerge, it may lead to a decline in market confidence. In addition, policy implementation may face resistance and uncertainty.
Risk of market overheating: Rapid market rise in the short term may lead to bubble risks, and you need to be wary of price corrections.
Global regulatory environment: Changes in regulatory policies in other countries may also affect global crypto market trends and require close attention.
6. Investment strategy suggestions and summary
1. Strategies for different types of investors
Conservative investors: It is recommended to allocate funds mainly in mainstream cryptocurrencies such as Bitcoin and Ethereum because of their large market capitalization and relatively low volatility. At the same time, maintain a moderate cash ratio to cope with market fluctuations.
Robust investors: On the basis of holding mainstream cryptocurrencies, they can appropriately allocate some tokens with medium market capitalization and potential. At the same time, pay attention to the fundamentals and technical development of the project.
Radical investors: In addition to mainstream and mid-market capitalization tokens, they can allocate some emerging project tokens, but they need to conduct in-depth research on the project background, assess risks, and take stop-loss measures.
2. Risk assessment and management suggestions
Diversify: Avoid investing all your money in a single asset and diversify your investments to reduce risk.
Set a stop loss point: Set a stop loss point for each investment to prevent losses from expanding.
Continuous learning: Keep an eye on market dynamics and adjust investment strategies in a timely manner.
Psychological construction: The cryptocurrency market is highly volatile, so investors should remain calm and avoid emotional operations.
In summary, Trump’s election had a positive impact on the cryptocurrency market, with high market sentiment and rising prices in the short term. The mid- to long-term trend will depend on the effect of policy implementation, changes in the regulatory environment and the development of the market itself. Investors should remain cautious, pay attention to policy trends and market risks, formulate investment strategies that suit their own risk tolerance, manage risks well, and make rational decisions.
about Us
Hotcoin Research, as the core investment research department of Hotcoin, is committed to providing detailed and professional analysis of the cryptocurrency market. Our goal is to provide investors of all levels with clear market insights and practical operating guidance. Our professional content includes the "Play and Earn Web3" series of tutorials, in-depth analysis of cryptocurrency industry trends, detailed analysis of potential projects, and real-time observation of the market. Whether you are a newbie exploring the crypto space for the first time or a seasoned investor looking for in-depth insights, Hotcoin will be your reliable partner in understanding and seizing market opportunities.
Risk warning
The cryptocurrency market is highly volatile and investing inherently carries risks. We strongly recommend that investors fully understand these risks and invest within a strict risk management framework to ensure the safety of their funds.
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