Author: Ryan Weeks, Bloomberg; Translated by: Wuzhu, Golden Finance
The United States is reclaiming its position as the undisputed leader in the cryptocurrency market.
From a record batch of Bitcoin ETFs to more accommodating regulators, rising political donations and the rising presidential candidacy of cryptocurrency supporter Donald Trump, signs of a resurgence in the U.S. crypto industry are suddenly everywhere.
Perhaps most telling: The U.S. dollar lost its position as the most traded currency in crypto assets to the South Korean won in the first quarter, but has made a strong comeback, accounting for more than 50% of global trading volume in early May, according to a report from research firm Kaiko.
It’s all a stunning turnaround from last year, when trading volumes shifted to Asia amid a series of enforcement actions by U.S. regulators. The Securities and Exchange Commission (SEC) went after players such as Binance and Coinbase Global Inc. in 2023 and unexpectedly moved in late May to approve an exchange-traded fund that invests in ether.
Trump currently holds a narrow lead over President Joe Biden in the polls, according to data tracked by Morning Consult.
On the legislative front, Bloomberg Intelligence analysts said the chances of the 21st Century Financial Innovation and Technology Act being passed into law in 2025 are rising. The bill would establish a new regulatory framework for cryptocurrencies in the U.S., something the industry has long called for.
Mike Novogratz, the billionaire founder and CEO of Galaxy Digital, said on Tuesday that a more positive U.S. political environment could push the price of bitcoin above $100,000 by the end of the year. The largest digital asset was trading at $71,130 as of 3:10 p.m. on Wednesday in Singapore.
The political tide began turning in favor of cryptocurrencies on Jan. 11 as firms including BlackRock Inc. and Fidelity Investments launched spot bitcoin ETFs, which have amassed $61 billion in assets to date, making them one of the most successful fund categories ever. Their influence has reshaped trading patterns, which are increasingly moving toward U.S. trading hours.
Kaiko said that the share of cumulative Bitcoin trading volume in the hour before the close of the U.S. market has increased from 4.9% during the crypto bull run in 2021 to 7.2% this year. Kaiko said this may be due to the fact that the Bitcoin ETF uses the benchmark at the time to calculate its net asset value, "encouraging arbitrage and price discovery."
Hong Kong recently launched its own batch of spot crypto ETFs, tracking bitcoin and second-largest token ethereum. So far, those products have generated nowhere near the inflows seen in derivatives in the United States.
Rich Rosenblum, co-founder of crypto market maker GSR Markets, said the collapse of Sam Bankman-Fried’s FTX in late 2022 “had a huge chilling effect on U.S. institutional investment, opening a window for Asia to lead the way.” After the U.S. became the clear winner in Bitcoin ETF inflows, the U.S. is starting to take back the lead.
Data tracked by Galaxy Digital shows that the United States has 324 venture capital firms focused on cryptocurrencies, far more than the 66 in second-place Singapore.
Two prominent US investment firms, Pantera Capital and Paradigm, are raising new funds of more than $1 billion and more than $750 million, respectively.
Some U.S. investors have even managed to profit from FTX’s collapse. Pantera has been an active buyer of $2.6 billion worth of Solana tokens that the bankrupt exchange sold at below-market prices. FTX’s creditors will be repaid in full — but some are still unhappy that they can’t get their original cryptocurrency back.