In the volatile cryptocurrency market, every move of a whale is like a prelude to a tsunami, which is extremely shocking.
At present, WLFI, a cryptocurrency project under the name of the incoming US President Trump, plays such a key role. Recently, WLFI is like a "money printing machine" running at full power, frantically sweeping up various cryptocurrencies, including Ethereum, LINK, AAVE, etc., with huge transaction amounts and high frequency, instantly becoming the focus of the currency circle.
Trump's support for cryptocurrency, which he expressed a long time ago, has now turned into real money investment, shocking the market.
What is strange is that he "ignored" Bitcoin, the king of cryptocurrencies, and instead favored Ethereum and a number of niche currencies.
This operation is like a strange but key piece in the crypto puzzle, making everyone rethink the market structure. Ethereum, although it seems to have doubled in price in 2024, is actually weak in key aspects such as value storage, speculative returns, and practical performance compared with many of its peers. On the other hand, altcoins are like hunters lurking in the dark, waiting for an opportunity to move. Trump's external force intervention is like a spring breeze of reform, giving them an opportunity to counterattack.
Trump's cryptocurrency buying spree
Since the birth of the cryptocurrency market, the unusual movement of large amounts of funds can always instantly ignite the market's boiling point, and Trump's recent series of operations by the encryption project WLFI are undoubtedly a super blockbuster bomb thrown into this market.
According to data from authoritative monitoring platforms such as Onchain Lens, in the past 4 hours, WLFI spent 1 million USDC to purchase 37,052 LINK, and spent 151,985 USDC to acquire 422 AAVE. Such rapid speed and generosity are astonishing.
Extending the timeline to 48 hours, his buying continued without stopping, with a total of 2,631 ETH, 4,043 AAVE and 78,387 LINK purchased. He was like a tireless shopaholic, sweeping through the digital asset shelves.
The on-chain data on December 12 pushed this “carnival” to a climax. WLFI purchased $5 million worth of Ethereum, equivalent to about 1,285 ETH, through CoW Swap.
Currently, the WLFI multi-signature address holds 14,573 ETH (worth approximately US$57.03 million), 102.9 CBBTC (approximately US$10.38 million), 3.108 million USDT, 1.515 million USDC, 41,335 LINK (approximately US$1.17 million), 3,357 AAVE (approximately US$1.16 million), and other cryptocurrencies, which is like a treasure trove of digital assets.
Ethereum: Current status and challenges coexist
Ethereum seems to be in good shape in 2024, with its price nearly doubling and approaching its historical high. However, in the competitive landscape of cryptocurrencies, it is in an awkward position, with its rate of return lagging behind the top ten currencies, even worse than Bitcoin. Despite the favorable factors such as the approval of spot ETFs and the upgrade of Dencun, it is gradually falling behind in the competition of returns, which not only confuses investors, but also echoes the peculiar layout of Trump's project that does not buy Bitcoin but heavily invests in Ethereum, which has led the market to dig deep into Ethereum's competitiveness and the deep meaning of Trump's move.
Competition among three major application scenarios
Value storage dimension
Bitcoin is firmly on the throne of value storage, with a constant total of 21 million coins, clear supply rules, and market-proven value preservation capabilities. Many central banks are interested in its reserve potential. Although Ethereum has a staking reward and energy-saving consensus mechanism, the market does not recognize it, and few countries have included it in their strategic reserves. Trump avoided Bitcoin and chose Ethereum, or he was betting that it could make up for its shortcomings and reshape its value with the help of future policies, which is quite risky.
Speculative investment level
Ethereum is the 26th largest asset in the world, but its large market capitalization has become a drag, and it is difficult for it to appreciate as rapidly as small coins.
Small coins have small market caps but great potential, and often see high multiple increases. Trump's team abandoned the steady path of Bitcoin and instead invested in Ethereum and niche coins, perhaps hoping to make huge profits from speculating in small coins and use funds to trigger growth, but there is also the risk of being caught in a market vortex.
Utility perspective
Among emerging use cases, Ethereum focuses on security and decentralization, lacks scalability and simplicity, and has transaction congestion and high fees.
Solana, Stellar and other altcoins have taken a lot of market share with their speed and low fees. Trump's aggressive purchase of Ethereum is not only to help it break through, but also to diversify the layout to prevent Ethereum from losing its position, and to rely on niche coins to make profits in practical scenarios and stabilize the encryption landscape.
However, the Ethereum developer community is very active, with tens of thousands of developers around the world constantly optimizing and upgrading. Smart contract innovation and Layer2 expansion solutions have frequently emerged, allowing Ethereum to take root in the first echelon and have the potential to counterattack. Trump's team may have chosen it just because of the creativity of developers, hoping to overtake others, but whether it can be achieved remains to be tested by the market.
Altcoins are gaining momentum
In the development history of the cryptocurrency market, Bitcoin and Ethereum have long dominated, but the rise of altcoins cannot be ignored.
In 2017 and 2021, altcoins seized considerable market share from mainstream currencies thanks to an influx of funds and innovative concepts, triggering an investment boom.
Recently, the market share of altcoins has increased from 27% to 33%. Behind this change is the convergence of aggressive funds and retail investors who follow the trend, as well as the boost from hot spots such as emerging public chains, showing a new momentum for the rise of altcoins.
Regulatory Spring Breeze
After Trump took office, the direction of cryptocurrency regulation in the United States changed. Former SEC Chairman Gensler took a strict attitude towards altcoins, causing projects such as XRP and Solana to face charges of "unregistered securities" and the risk of being delisted.
Atkins, who was appointed by the Trump administration, is supportive of digital assets, which indicates that regulation may be relaxed, bringing new development opportunities for altcoins. Projects such as Solana and Cardano are expected to get rid of legal disputes, while Bitcoin and Ethereum may not gain additional benefits from this policy change due to their earlier policy characterization.
In addition, the current chairman Gensler has filed many lawsuits against small cryptocurrencies, claiming that Ripple (XRP - USD), Solana and Cardano (ADA - USD) are unregistered securities. Such lawsuits threaten to remove these tokens from exchanges such as Coinbase and impose various restrictions. More generally, these semi-centralized cryptocurrencies have long lacked clear regulatory classification by the SEC, but fortunately this problem is expected to be solved in the next four years as the regulatory level changes.
If the SEC's lawsuit against Coinbase ends, the cryptocurrencies directly involved in the lawsuit will become the biggest winners, and the list of beneficiaries is star-studded, including:
Solana
Cardano
Polygon (MATIC - USD)
FileCoin
Sandbox (SAND - USD)
Axie Infinity (AXS - USD)
Flow
Internet Computer (ICP - USD)
Near (NEAR - USD) 等。
ETF Potential Breakout
The significant increase in market value of Bitcoin and Ethereum after they received ETF approval via the futures market is due to the fact that ETFs provide investors with an easy way to enter the market, and any other cryptocurrency that receives ETF approval may see similar price increases in the future (as they will be more accessible to investors).
Altcoins are also looking forward to the relaxation of policies, but the new government may take a more relaxed regulatory approach and allow the creation of ETFs for cryptocurrencies that do not have futures ETFs. This will benefit almost all cryptocurrencies that are large enough to be worth creating ETFs for, and bring opportunities for capital inflows to powerful altcoins such as LTC and XRP.
At the same time, the staking rules of Ethereum ETF may be adjusted due to the new policy. If the staking income can be integrated, Ethereum's position will be consolidated and effectively counter the impact of altcoins.
Tax benefits
The Trump team plans to exempt US companies from capital gains tax on the issuance of cryptocurrencies. If this policy is implemented, domestic US altcoins will become tax-free "darlings", and XRP, Solana, etc. will be favored by the capital market.
From the perspective of investment logic, if this move comes true, it will have far-reaching impact. However, upon closer examination, it is questionable whether it is reasonable to limit this tax benefit to cryptocurrencies issued by US companies. After all, in essence, this type of cryptocurrency with an issuer is more centralized than Bitcoin and Ethereum, which have no specific issuer and are more decentralized.
For better or worse, Bitcoin and Ethereum are doomed to miss out on this potential tax benefit, while the cryptocurrencies that do enjoy the benefit are:
XRP
Solana
Cardano
Avalanche (AVAX - USD)
ChainLink (LINK - USD)
Stellar
Ivy
FileCoin
Algorand
Flow
To sum up, the rise of altcoins is influenced by multiple factors, including historical market share rotation patterns, changes in regulatory policies, potential breakthroughs in ETFs, and tax benefits. These factors work together to provide new opportunities and challenges for the development of altcoins.
Altcoin Potential Outlook in 2025: Market Dynamics and Investment Strategies
As the proposals of the new Trump administration stir up waves in the cryptocurrency space, market participants are paying close attention to its far-reaching impact on the industry. Among the many cryptocurrencies, projects such as XRP, Cardano, Stellar, Algorand, and Hedera have become the focus due to their outstanding market performance. Since the election results were announced, these tokens have performed well among the top 50 cryptocurrencies, with some tokens rising by more than 200%, showing the market's recognition of their future potential.
In this "buy the rumor" phase, the altcoin market share has not yet reached the peak at the end of the historical cycle, which means they still have a lot of room to grow. Although I personally remain cautious about the market, I am also unwilling to miss potential investment opportunities. Therefore, I reallocated part of the profits from Bitcoin and Ethereum to these potential altcoins, adopting a balanced investment strategy.
The portfolio is divided into two parts: one part is those tokens that have not appreciated significantly but are expected to benefit from policy changes, such as FileCoin, Flow and Solana; the other part is Algorand, Hedera and Stellar, which are leading performers in the current cycle. These tokens have not only attracted attention in the cryptocurrency field, but have also been adopted in the real world by large companies such as Visa, Mastercard, Stripe, etc., showing their practicality and recognition in the mainstream economy.
Nevertheless, investing in these assets that appreciate rapidly in the short term also comes with risks. Many altcoins are different from Bitcoin and Ethereum. They may have a certain degree of centralization issues, and the issuing companies may sell tokens due to capital needs, which increases the uncertainty of investment.
Therefore, this investment is a short-term strategy and should be adjusted in 2025 based on market dynamics to achieve asset preservation and appreciation and risk management.
In the world of cryptocurrency, every step requires caution, but through careful planning and keen insight into market trends, we can find our own opportunities in this investment journey.