Author: Socra, Golden Finance
On November 6, Trump's victory in the U.S. election and return to the White House means that the Trump 2.0 era is about to begin. Benefiting from his friendly attitude towards the crypto industry, BTC has repeatedly set historical highs, approaching the $80,000 mark, while altcoins are experiencing a long-awaited bullish trend.
Due to the aggressive upward momentum of this crypto rally, many investors are concerned whether the current crypto market is somewhat overheated. Those who have already entered the market are also contemplating the market trends after Trump's victory and even planning investments for after Trump's official inauguration next year. In this regard, Golden Finance has summarized the recent authoritative predictions from various parties regarding the future market outlook and possible bullish and bearish events.
I. Major Events Impacting the Crypto Market
Bullish:
1. Inflows of Spot Bitcoin ETF
On November 6, the total trading volume of spot Bitcoin ETFs exceeded $6 billion, with BlackRock's spot Bitcoin ETF trading volume exceeding $4.1 billion, setting a new historical high.
On November 7, BlackRock's Bitcoin ETF had inflows of $1.11692 billion, marking the largest fund inflow since its launch. The top four daily inflows were: $1.11692 billion on November 7; $872 million on October 30; $849 million on March 12; $788 million on March 5.
2. Interest Rate Cut Cycle
On November 7, Eastern Time, after the FOMC meeting, the Fed announced a reduction in the target range for the federal funds rate from 4.75% to 5.0% to 4.5% to 4.75%, a decrease of 25 basis points (bp).
According to CME's 'Fed Watch', the probability of the Fed cutting rates by 25 basis points in December is 71%. The probability of maintaining the current rate in January next year is 16.6%, the cumulative probability of a 25 basis point cut is 53%, and the cumulative probability of a 50 basis point cut is 30.4%.
JPMorgan expects the Fed to cut rates quarterly after the December policy meeting until the federal funds rate reaches 3.5%.
3. Favorable Policies and Regulatory Easing
On November 6, the Republican Party gained control after securing critical Senate seats in Ohio and West Virginia, meaning the Republicans have obtained a majority control of the U.S. Senate. This could imply that Congress will be more supportive of cryptocurrency, as the Republican-led Senate is expected to prepare clearer cryptocurrency regulations.
CoinShares: The biggest benefit for cryptocurrency under Trump would be through a Bitcoin bill. Meanwhile, a Wyoming senator proposed a 2024 Bitcoin bill aimed at establishing a strategic Bitcoin reserve, intending to purchase 1 million Bitcoins within five years.
Trump's team is considering nominating Robinhood's Chief Legal and Compliance Officer Dan Gallagher as a candidate for SEC Chairman.
SEC's crypto-friendly commissioner Hester Peirce is considered a potential successor for the next chairman.
Ethereum technical expert Vinay Gupta plans to advocate for crypto policy to Trump's transition team.
Bernstein: The SEC and Senate Banking Committee are expected to adopt a friendly stance towards cryptocurrency after Trump takes office. It is anticipated that crypto assets will be re-rated, as it remains unclear whether these assets qualify as securities.
Additionally, both the stablecoin and market structure bills may progress more quickly, benefiting issuers of stablecoins like Circle and Paxos, as well as cryptocurrency exchanges and brokers/dealers in the U.S.
Coinbase's Chief Legal Officer: We hope the SEC will stop suing cryptocurrencies and start creating rules.
Bitwise Asset Management's investment director believes that the entire cryptocurrency space has been like moving with shackles for years, but that should come to an end now. Investors have begun to accumulate crypto assets for the coming years.
Paradigm Policy Research Director: Former Biden White House staffer indicates that Democrats will no longer fight against cryptocurrency.
CCTV reports Bitcoin price hits a new high and states that Trump promised to establish a Bitcoin strategic reserve.
4. Financial Environment
After Trump's victory, Wall Street institutions like JPMorgan and Goldman Sachs are seeking potential opportunities for cryptocurrency companies to go public in the U.S., such as Kraken, Fireblocks, and Chainalysis.
Matrixport's weekly report shows that Bitcoin's adoption rate is close to the key 8% threshold, with approximately 7.51% of the global population (617 million people) using cryptocurrency, nearing an 8% adoption rate. Reaching this threshold could mark a turning point for Bitcoin's mainstream application.
Bearish:
Powell: As we approach neutral interest rates, it may be necessary to slow the pace of rate cuts.
Barclays expects the Fed to only cut rates twice in 2025, each by 25 basis points, down from a previous forecast of three cuts. The Bank of England is expected to maintain rates in December, whereas a cut was previously forecasted.
Analyst at Orion Portfolio Solutions: Since the first rate cut, long-term rates have been on a sharply rising trajectory and began to decline after today's rate cut announcement. Given the strong U.S. economy, the future path for the Fed may be more complex than steady rate cuts.
II. Predictions from Various Parties
Bullish:
Galaxy Research Director: Bitcoin has repeatedly set historical highs this week, and from a fundamental perspective, the market does not appear overheated.
Galaxy CEO: Trump's victory may bring 'hundreds of billions of dollars' to the crypto ecosystem.
Nansen analysts have expressed similar views. 'Bitcoin breaking historical highs under high trading volume is a clear signal of sustained positive momentum after the election,'
JPMorgan: Bitcoin is expected to continue benefiting from Trump's victory over the next eight weeks, with reactions similar to those seen in 2016. Trump has repeatedly stated that he will support the digital asset industry and raise tariffs, both of which could ultimately benefit Bitcoin.
QCP Capital: BTC has experienced three election cycles, all showing rebound trends and prices have never fallen back to previous performances. It is expected that in 2025, this bullish momentum will remain strong.
Standard Chartered: After Trump's victory, Bitcoin is expected to reach $125,000 by the end of this year and $200,000 by the end of 2025. In terms of regulation, it is expected that Trump will overturn Biden's veto on SAB 121.
Coinbase CEO: From a policy perspective, cryptocurrencies will continue to exist until the industry is established in the U.S.
Bitwise Chief Investment Officer: We are entering a golden age for cryptocurrencies, and we will see a strong bull market in the coming years.
Head of Research at Copper: By the time Trump takes office on January 20, 2025, Bitcoin's price is likely to reach $100,000. During Trump's presidency from 2016 to 2020, Bitcoin witnessed two historical peak cycles. Although these increases occurred against a backdrop of a weakening dollar, which is different from the current strong dollar environment. However, given that the Bitcoin spot ETF currently holds about 1.1 million Bitcoins, momentum may remain positive in the coming months.
CNBC: Bitcoin's price could reach $100,000 before the presidential inauguration.
Bernstein analysts: After Trump's victory, the headwinds for crypto regulation have turned into tailwinds. A new 'crypto-friendly' SEC chairman and Senate Banking Committee are expected to accelerate regulatory transparency for the industry. The crypto industry is seeking new rules to define digital assets as other assets apart from securities, the applicability of broker-dealer laws to crypto exchanges and DeFi, expedited approvals for investment products like ETFs, and allowing banks to hold and custody cryptocurrencies.
MakerDAO founder: Trump's victory will drive a true and sustained revival of DeFi, with the likelihood of a tenfold increase in user numbers greatly increasing, as compared to other aspects of the crypto space, DeFi benefits the most from reduced regulatory uncertainty in the U.S.
Bearish:
Analyst at Orion Portfolio Solutions: The path to future rate cuts may be more complicated. The FOMC announced a 25 basis point rate cut in November as expected, marking a reduction in their aggressiveness relative to the September cut. Notably, since the first rate cut, long-term rates have been on a sharply rising trajectory and began to decline after today's rate cut announcement. Given the strong U.S. economy, the future path for the Fed may be more complex than steady rate cuts.
Canadian Imperial Bank of Commerce: Businesses and markets have reason to remain cautious about Trump 2.0. Protectionism may become a disadvantage for U.S. and global economic growth. Implementing fiscal stimulus on an over-demanding U.S. economy could trigger inflation risks and rising yields again, leading to an increase in the U.S. fiscal deficit.
Summary
From the mainstream views of major institutions at present, the vast majority are optimistic about the crypto market's future and believe that a new bull market may be on the horizon. In contrast, bearish events and negative commentary have become the 'minority', with bearish logic mainly stemming from the slowdown of Fed rate cuts and potential economic crises caused by inflation, which could affect the crypto market. However, from the perspective of the overall market at this stage, it is evident that traders choosing to sell or short now may be acting against the trend.
